BellSouth 3rd Quarter Results

Bellsouth Corp
25 October 2005



For Immediate Release

October 25, 2005





                      BellSouth Reports Third Quarter Earnings

•       Improving Cingular margins contribute to BellSouth results

•       Strong DSL net customer additions

•       $2 billion share repurchase program



ATLANTA - BellSouth Corporation (NYSE: BLS) announced third quarter 2005
earnings per share (EPS) from continuing operations of 44 cents compared to 43
cents in the second quarter of 2005 and 46 cents in the third quarter of 2004.
Normalizing items in the third quarter of 2005 consisted of Hurricane
Katrina-related costs, wireless merger integration costs, and a gain from the
sale of an investment.  Normalized EPS from continuing operations was 46 cents,
flat compared to the second quarter of 2005 and a 3 cent decline compared to the
third quarter of 2004.



"Results for the quarter remained strong despite extraordinary challenges we
faced with Hurricane Katrina," said Duane Ackerman, Chairman and Chief Executive
Officer.  "Our employees demonstrated tremendous commitment to serve our
customers.  At the same time, we maintained focus on the key growth areas of our
business, delivering solid revenue performance and continued customer growth
from broadband and wireless services."





Normalized Results from Continuing Operations

Normalized results from continuing operations include BellSouth's 40 percent
proportionate share of Cingular's revenues and expenses.  Cingular completed its
acquisition of AT&T Wireless on Oct. 26, 2004.  Results prior to the acquisition
date have not been restated.



For the third quarter of 2005, normalized revenue was $8.49 billion.  Normalized
revenue for the quarter was down slightly compared to the second quarter of
2005.  Billing credits related to Hurricane Katrina reduced normalized revenues
by $63 million.  Operating income and net income were essentially flat compared
to the second quarter of 2005, reflecting continued improvement in the wireless
business that offset pressures in wireline services.  Year-over-year, third
quarter 2005 normalized revenue was up compared to $6.76 billion in the third
quarter of 2004.  Third quarter normalized net income was $845 million, a $48
million decrease compared to the same quarter of the previous year due to a
decline in earnings from the Communications Group and financing costs associated
with the acquisition of AT&T Wireless partially offset by higher earnings from
Cingular.







Reported Results from Continuing Operations

For the third quarter of 2005, BellSouth's consolidated reported revenue from
continuing operations totaled $5.07 billion, a slight decrease compared to the
same quarter of 2004.  Income from continuing operations was $817 million
compared to $852 million in the same quarter of the previous year.  Reported
results for the quarter include the financial impacts of two significant events.
  During the quarter, the Company recognized a $228 million after-tax gain from
the sale of its share in Cellcom, a cellular communications operator in Israel.
In addition to the negative impact of hurricane-related billing credits, the
Company also incurred $200 million of incremental expense and asset impairments,
net of taxes, associated with damage from Hurricane Katrina.


On Sept. 6, 2005, BellSouth made an initial estimate of the future cost for
network restoration, including capital and expense, of $400 million to $600
million.  The company continues with damage assessments as we gain access to all
areas. This estimate is subject to many uncertainties, the most significant of
which include completion of physical surveys, the government's specific plans
for reconstruction of the City of New Orleans and the resulting impact on our
network design.



Operating free cash flow (defined as net cash provided by operating activities
less capital expenditures) was $1.2 billion for the third quarter of 2005.
Capital expenditures for the third quarter of 2005 were $886 million.  During
the quarter, the Company received $625 million in proceeds from the sale of
Cellcom, $949 million in proceeds from loan repayments from Cingular and paid
down approximately $700 million in debt. The dividend for the third quarter was
29 cents per share or $1.16 per share annualized.  Reflecting management's
confidence in generating operating free cash flow and increasing distributions
from Cingular, the Company will allocate a portion of future cash flow for share
repurchase.  The board of directors authorized the repurchase of up to $2
billion of common stock through the end of 2007.





Communications Group

In the third quarter of 2005, Communications Group revenue was $4.59 billion, a
slight decline compared to the same quarter of 2004.  Billing credits to
customers in the areas hardest-hit by Hurricane Katrina reduced revenue by $44
million.  Revenue growth from long distance, DSL and small business services
effectively offset revenue declines from residential access line loss and large
business services.  Third quarter operating margin was 22.3 percent compared to
25.0 percent for the full year of 2004.



The success of BellSouth's new simplified pricing for BellSouth(R) FastAccess(R)
DSL drove strong subscriber growth in the third quarter of 2005.  During the
quarter, BellSouth added 205,000 net DSL customers and now serves nearly 2.7
million customers with broadband DSL service.  The company's gross adds
significantly improved, demonstrating continued growth in market demand for
broadband services.  Sequentially, DSL average revenue per user (ARPU) remained
steady at nearly $40.  For the third quarter, network data revenue, which
includes revenue from DSL services, was $1.17 billion.



BellSouth continued penetrating its customer base with incremental services and
now serves approximately 7.0 million mass-market long distance customers.  The
Company added 222,000 net mass-market long distance customers during the third
quarter of 2005 to reach 56 percent penetration of its mass-market customer
base.  During the third quarter, 66,000 customers added DIRECTV(R) service to
their communications packages, reaching a total of more than 460,000.  For
convenience and simplicity, customers can combine DSL, long distance, DIRECTV(R)
and Cingular Wireless with the BellSouth Answers(R) bundle.  At quarter-end,
BellSouth had 4.9 million BellSouth Answers(R) residential customers, which is a
42 percent penetration of the company's retail residential access lines.



As of Sept. 30, 2005, total access lines were 20.4 million, down 354,000
compared to June 30, 2005.  The Company estimates approximately 40,000 of this
decline is attributable to disconnections associated with Hurricane Katrina.
The remaining access line loss was driven by wireless substitution and cable
telephony providers in residential markets.  Residential retail access lines
were down 181,000.  In contrast, business retail access lines grew 37,000 lines
with positive results in both small and large business segments.  UNE-P
(Unbundled Network Elements-Platform) access lines resold by BellSouth
competitors were down 228,000 compared to June 30, 2005.





Cingular Wireless

In the third quarter, Cingular Wireless delivered balanced results driven by
improved margins and progress on merger initiatives, positively impacting
BellSouth's earnings.  Cingular had gross additions of 4.4 million and net
additions of 867,000 bringing its nationwide customer base to 52.3 million
customers at quarter-end.  Total churn was 2.3 percent, a 10 basis point
sequential increase reflecting seasonal patterns and a relatively high number of
contract expirations in the quarter.



Cingular's reported revenue was $8.7 billion, which is a 6.2 percent increase
compared to pro forma revenue in the same quarter a year ago.  Credits issued to
customers in the areas affected by Hurricane Katrina reduced Cingular's reported
revenue by $31 million.



Cingular's normalized service margin from operating income before depreciation
and amortization (OIBDA) was 31.6 percent, 270 basis points higher than the
second quarter of 2005.  This increase demonstrates the company's continued
progress on merger integration initiatives.  Cingular's proportion of
BellSouth's operating margin before depreciation and amortization expanded from
21 percent in the fourth quarter of 2004 to 31 percent in the third quarter of
2005.  With Cingular representing 41 percent of BellSouth's normalized revenue
and a growing percentage of its profit, continued margin growth at Cingular will
have a compounding affect on BellSouth's profitability.



ARPU was $49.65, a decline of 5.2 percent from pro forma ARPU in the same
quarter a year ago.  Data service ARPU continued its strong growth reaching
$4.33 driven by increasing market demand for text messaging, mobile e-mail,
downloadable ringtones, games and photo messaging.



Network integration and UMTS deployment are progressing.  GSM migration is
moving toward completion with 93 percent of MOUs carried on Cingular's GSM
network.  Cingular has now converted 6 million former AT&T Wireless subscribers
to new Cingular plans.  UMTS deployment is on schedule for 15 to 20 markets
before the end of 2005.  UMTS will provide simultaneous voice and data and is
expected to have the fastest average speeds in the industry.





Advertising & Publishing

In the third quarter of 2005, Advertising & Publishing revenue was $509 million,
an increase of 2.2 percent compared to the same quarter of the previous year.
Adjusted for hurricane-related revenue credits, revenue growth was 3.6 percent.
Growth in this business is driven by rapidly increasing online advertising and
other new print services.  Operating margins remained strong at 45.8 percent.
Segment net income was $146 million, up $5 million compared to the third quarter
of 2004.


Normalizing Items

In the third quarter of 2005, the difference between reported (GAAP) EPS from
continuing operations and normalized EPS is shown in the following table:


                                                                             3Q05        3Q04       2Q05
GAAP Diluted EPS - Income from continuing operations                         $0.44      $0.46      $0.43

Hurricane-related expenses:                                                  $0.11      $0.01
    Asset impairment                                             $0.06
    Uncollectibles                                               $0.01
    Restoration                                                  $0.04

Wireless merger integration costs                                            $0.03      $0.01      $0.02
Gain on sale of Cellcom                                                     ($0.12)
Debt extinguishment costs                                                                          $0.01

Normalized Diluted EPS - Income from continuing operations (1)               $0.46      $0.49      $0.46

(1) 3Q04 does not sum due to rounding



Hurricane-related expenses - Represents third quarter 2005 Hurricane
Katrina-related charges of $200 million after-tax and consists of asset
impairment charges (based on preliminary damage assessments), incremental labor
and material costs related to service restoration and network repairs, and
incremental uncollectible expense.  These expenses are comprised of charges
related to BellSouth's wireline business and its 40 percent share of Cingular
Wireless.  Third quarter 2004 charges represent incremental labor and material
costs in the wireline business due to Hurricanes Charley, Frances, Ivan and
Jeanne.



Wireless merger integration costs - Represents BellSouth's 40 percent share of
tax-effected wireless merger integration costs of $240 million incurred during
the third quarter of 2005 in connection with the Cingular/ AT&T Wireless merger.
  Integration costs include one-time cash outlays or specified non-cash charges,
including accelerated depreciation directly related to rationalization of the
wireless network, sales distribution channels, the workforce, information
technology systems and real estate.



Gain on sale of Cellcom - Gain related to sale of Cellcom, a cellular
communications operator in Israel.



Debt extinguishment costs - Represents one-time expenses associated with the
early extinguishment of $300 million of long-term debt in the second quarter of
2005.




About BellSouth Corporation



BellSouth Corporation is a Fortune 100 communications company headquartered in
Atlanta, Georgia. BellSouth has joint control and 40 percent ownership of
Cingular Wireless, the nation's largest wireless voice and data provider with
52.3 million customers.



Backed by award winning customer service, BellSouth offers the most
comprehensive and innovative package of voice and data services available in the
market. Through BellSouth Answers(R), residential and small business customers
can bundle their local and long distance service with dial-up and high-speed DSL
Internet access, satellite television and Cingular(R) Wireless service. For
businesses, BellSouth provides secure, reliable local and long distance voice
and data networking solutions. BellSouth also offers online and directory
advertising through BellSouth(R) RealPages.com(R) and The Real Yellow Pages(R).



BellSouth believes that diversity and fostering an inclusive environment are
critical in maintaining a competitive advantage in today's global marketplace.
More information about BellSouth can be found at http://www.bellsouth.com.



Further information about BellSouth and Cingular's third quarter earnings can be
accessed at www.bellsouth.com/investor.  The press release, financial statements
and Investor News summarizing highlights of the quarter are available on the
BellSouth Investor Relations website starting today at 8 a.m. Eastern Time (ET).



BellSouth will host a conference call with investors today at 10 a.m. (ET).

Dial-in information for the conference call is as follows:

Domestic:  888-370-1863

International:  706-634-1735



The conference call will also be webcast live beginning at 10 a.m. (ET) on our
website at www.bellsouth.com/investor.  The webcast will be archived on our
website beginning at approximately 1 p.m. (ET) today.



A replay of the call will be available beginning at approximately 1 p.m. (ET)
today, through November 1, 2005, and can be accessed by dialing:

Domestic:  800-642-1687 - Conference ID: 4107477

International:  706-645-9291 - Conference ID: 4107477



In addition to historical information, this document may contain forward-looking
statements regarding events and financial trends. Factors that could affect
future results and could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: (i) a change in
economic conditions in markets where we operate or have material investments
which would affect demand for our services; (ii) the intensity of competitive
activity and its resulting impact on pricing strategies and new product
offerings; (iii) higher than anticipated cash requirements for investments, new
business initiatives and acquisitions; (iv) unfavorable regulatory actions; and
(v) those factors contained in the Company's periodic reports filed with the
SEC. The forward-looking information in this document is given as of this date
only, and BellSouth assumes no duty to update this information.

This document may also contain certain non-GAAP financial measures. The most
directly comparable GAAP financial measures, and a full reconciliation of
non-GAAP to GAAP financial information, are attached hereto and provided on the
Company's investor relations website, www.bellsouth.com/investor.

For More Information Contact:

Jeff Battcher, Media Relations at 404-249-2793

BellSouth Investor Relations at 800-241-3419


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