BellSouth 4Q05 Earnings

Bellsouth Corp
25 January 2006


For Immediate Release
January 25, 2006


BellSouth Reports Fourth Quarter Earnings
     
•    Normalized earnings per share up 36 percent

•    Cingular reached 54.1 million customers; delivered strong revenue and
     margin

•    2.9 million DSL customers and strong DSL revenue growth


ATLANTA - BellSouth Corporation (NYSE: BLS) announced fourth quarter 2005
earnings per share (EPS) from continuing operations of 34 cents, up 36 percent
compared to the fourth quarter of 2004.  Normalized EPS from continuing
operations was 53 cents, a 36 percent increase compared to the fourth quarter of
2004.

A list of normalizing items is provided in the table below.

"BellSouth is delivering solid revenue growth and strong earnings growth," said
Duane Ackerman, Chairman and Chief Executive Officer.  "BellSouth's earnings for
the quarter reflect the value of our asset mix as the industry continues to
undergo a transition to new services and new competition emerges."


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 October 26, 2004.  Results prior to the
acquisition date have not been restated.  The Company is conforming its
normalized financial reporting to align to industry peers for the treatment of
purchased intangible assets.   Normalized results exclude the non-cash
amortization of purchased intangibles created in Cingular's acquisition of AT&T
Wireless.  Prior periods have been recast for the change. (Reconciliation
attached).

For the fourth quarter of 2005, normalized revenue was $8.7 billion.  Normalized
revenue for the quarter was up nearly 2 percent sequentially driven by DSL
growth and Cingular customer growth.  Normalized net income of $965 million grew
$27 million compared to the third quarter of 2005.

For the full year of 2005, BellSouth normalized revenues reached $34 billion,
over 40 percent of which came from Cingular Wireless.  Full year 2005 normalized
EPS was $2.00, a 7 percent increase compared to 2004 as higher contribution from
the combined Cingular/AT&T Wireless offset financing costs associated with this
transaction and pressures in the wireline business.


Reported Results from Continuing Operations

For the fourth quarter of 2005, BellSouth's consolidated reported revenue from
continuing operations totaled $5.2 billion, up nearly 2 percent compared to the
same quarter of 2004.  Income from continuing operations was $618 million
compared to $453 million in the same quarter of the previous year.  For the full
year of 2005, income from continuing operations was $2.9 billion compared to
$3.4 billion for the full year of 2004.  Reported results for the quarter and
for the year include the financial impacts associated with the damage from
Hurricane Katrina.

BellSouth finished 2005 with strong cash flow and a solid balance sheet.  For
the full year of 2005, operating free cash flow (defined as net cash provided by
operating activities less capital expenditures) was $3.3 billion.  Capital
expenditures for the year amounted to $3.5 billion, including expenditures
related to restoration for damages from Hurricane Katrina.  The Company reduced
debt by $3.4 billion in 2005 and repurchased nearly $1 billion of its
outstanding shares during the fourth quarter.  In October 2005, the board of
directors authorized the repurchase of up to $2 billion of common stock through
the end of 2007.  The dividend for the fourth quarter was 29 cents per share or
$1.16 per share annualized.


Summary of Impacts from Hurricane Katrina

During the fourth quarter of 2005, revenue was reduced by $48 million due to
Katrina-related billing credits and the Company estimates approximately 60,000
access lines were disconnected in the affected area.  The Company incurred $244
million of incremental expense and $189 million of incremental capital during
the fourth quarter.

For the full year, revenue credits totaled $111 million across all three
business segments.  The Company estimates approximately 100,000 access lines
have been disconnected as a result of the hurricane.  We have seen some above
trend inward movement in other wire centers, presumably from customers
relocating within our markets and from businesses migrating to New Orleans to
participate in reconstruction, but it is difficult to estimate the extent of
this impact.

For the year, incremental expenses for wireline network restoration and capital
are approximately $500 million.  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.  Based on current assessments to
complete the restoration effort, the Company now expects this amount to total
$700 million to $900 million.  We expect a portion of the cost associated with
the Hurricane Katrina recovery effort to be covered by insurance.  While the
exact amount has not been determined, our current estimate of the amount of
covered losses, net of our deductible, is approximately $250 million. The actual
recovery will vary depending on the outcome of the insurance loss adjustment
effort.


Communications Group

In the fourth quarter of 2005, Communications Group revenue was $4.7 billion,
nearly a 1 percent increase compared to the same quarter of 2004.  Operating
margin was 21.9 percent compared to 21.6 percent for the same quarter of the
previous year.

For the full year of 2005, Communications Group revenue held steady at $18.5
billion.  The Consumer and Small Business market segments delivered solid
revenue growth with DSL and long distance service revenue outpacing revenue
declines from residential access line loss.  Full year operating margin was 23.0
percent compared to 25.0 percent for the full year of 2004.  The 2005 operating
margin was impacted by higher retiree medical expense, overtime expenses from
severe weather and Katrina billing credits.

BellSouth is focused on driving broadband penetration and served nearly 2.9
million broadband DSL customers at year-end.  During the fourth quarter of 2005,
the Company added 204,000 net DSL customers driven by the continued success of
BellSouth's new simplified pricing and improving churn.  To meet market demand
for faster broadband speeds, BellSouth introduced an up to 6 Mbps DSL service in
limited areas during the quarter and, in early January 2006, lowered the price
on the up to 3 Mbps DSL service to $37.95.  Both actions offer customers
opportunities to increase their broadband speed at attractive price points.

For the fourth quarter, network data revenue was $1.25 billion, up 7.7 percent
from the same period of the prior year.  Retail data revenue grew 15.9 percent
from the same period last year driven by a 32.5 percent increase in retail DSL
revenue and 4.4 percent growth in revenue from other retail data services.
Wholesale data declined 2.8 percent as growth in wholesale services to wireless
carriers partially offset declines in traditional wholesale data transport
services.  For the year, network data revenue grew 5.1 percent totaling more
than $4.7 billion.

BellSouth customers continue to want simple, reliable communications services
conveniently combined in a package.  Customers can bundle DSL, long distance,
DIRECTV(R) and Cingular Wireless under the BellSouth Answers(R) bundles.  By the
end of 2005, more than 4.9 million residential customers combined their services
under BellSouth Answers(R), a more than 43 percent penetration of its retail
residential lines.  In addition, BellSouth now serves almost 7.2 million long
distance customers, a 57.7 percent penetration of its mass-market customer base,
and a total of 523,000 customers have included DIRECTV(R) services in their
communications packages at year-end.

While access lines were down 6.2 percent for the year, revenues grew as a result
of higher penetration of broadband and long distance services.  As of Dec. 31,
2005, total access lines were 20.0 million, down 409,000 compared to Sept. 30,
2005.  Other than the 60,000 estimated disconnects associated with Hurricane
Katrina, access line loss continues to be primarily driven by wireless
substitution and, to a lesser extent, by competition from cable telephony
providers.  Retail residential access lines were down 189,000.  Retail business
access lines increased 12,000 driven by Small Business gains.  As expected,
Commercial Agreement/UNE-P (Unbundled Network Elements-Platform) access lines
resold by BellSouth competitors were down compared to Sept. 30, 2005.


Cingular Wireless

Cingular's strong results were a key driver of BellSouth's earnings growth.  The
nation's largest wireless carrier ended the fourth quarter of 2005 with 54.1
million cellular/PCS subscribers, an increase of 5 million compared to the
year-ago fourth quarter.  During the quarter, Cingular delivered record net
customer additions of 1.8 million.  Retail customer additions were approximately
840,000 reflecting steady growth in postpaid customers and an increase in
GoPhone(R) prepaid subscribers.  Seasonal reseller promotional activity drove
strong resale customer additions.  Monthly subscriber churn was 2.1 percent -
Cingular's best-ever overall churn results.  Postpaid churn improved to 1.9
percent.

In the fourth quarter of 2005, Cingular's revenues were $8.8 billion, up 9.4
percent over fourth quarter 2004 pro forma revenue and up 1.2 percent
sequentially.

Average revenue per user (ARPU) in the fourth quarter of 2005 was $48.86, a
decline of 2.2 percent from fourth quarter 2004 pro forma ARPU, reflecting
pressure on voice revenues partially offset by continued increases in data
services.  ARPU from data services showed strong growth in the fourth quarter of
2005, reaching $4.71, a nearly 9 percent increase compared to the third quarter
of 2005.  The increasing popularity and availability of downloadable games,
ringtones, and text messaging is driving data ARPU.

Normalized operating income before depreciation and amortization (OIBDA) margin
for the fourth quarter of 2005 was 31.0 percent, which was an improvement of 760
basis points compared to year-ago fourth quarter results but a sequential
decline of 60 basis points due to anticipated seasonal factors.  The
year-over-year margin improvement reflects the addition of 5 million customers,
progress on merger synergies including increased productivity, economies of
scale and lower churn.

In the fourth quarter of 2005, Cingular became the first carrier in the world to
operate a commercial UMTS/HSDPA network, which provides industry-leading data
throughputs with speeds of 400 to 700 Kbps.  Cingular deployed UMTS/HSDPA in 16
markets during the quarter and plans to have most of the top 100 markets
launched by the end of 2006.  In addition, Cingular brought a Push-to-Talk (PTT)
offer to market during the fourth quarter of 2005.


Advertising & Publishing

In the fourth quarter of 2005, Advertising & Publishing revenue was $529
million, up slightly compared to the same quarter of 2004.  Adjusting for $16
million in billing credits associated with Hurricane Katrina, revenue grew 3.2
percent.

For the full year of 2005, Advertising & Publishing revenue was up 2 percent
compared to 2004 (3.2 percent when adjusted for the full year Katrina billing
credits).  Revenue growth was driven by increasing online advertising and new
print services.   For the full year of 2005, online advertising revenue grew 39
percent to more than $100 million.  During the quarter the Company enhanced its
online services by completing the rollout of YELLOWPAGES.COMTM from BellSouth
(R).  Advertising & Publishing operating margins remained strong at 46.3 percent
for the full year.


Normalizing Items

For the fourth quarter and for the full year of 2005, the difference between
reported (GAAP) EPS from continuing operations and normalized EPS is shown in
the following table:

                                                                             4Q05                   FY05

GAAP Diluted EPS - Income from continuing operations                         $0.34                  $1.59

Hurricane-related expenses:                                                  $0.08                  $0.19
    Asset impairment                                             $0.00                  $0.06
    Uncollectibles                                               $0.00                  $0.01
    Other                                                        $0.01                  $0.02
    Restoration                                                  $0.07                  $0.10

Wireless merger integration costs                                            $0.04                  $0.11
Wireless merger intangible amortization                                      $0.05                  $0.20
Gain on sale of Cellcom                                                                            ($0.12)
Debt extinguishment costs                                                                           $0.01
Severance costs                                                              $0.03                  $0.03
Deferred revenue adjustment                                                 ($0.02)                ($0.02)

Normalized Diluted EPS - Income from continuing operations (1)               $0.53                  $2.00

(1) Does not sum due to rounding


Hurricane-related expenses - Represents asset impairment charges, incremental
labor and material costs related to service restoration and network repairs and
incremental uncollectible expense.  These expenses are comprised of Hurricane
Katrina charges related to BellSouth's wireline business and its 40 percent
share of Cingular Wireless' hurricane expenses.

Wireless merger integration costs - Represents BellSouth's 40 percent share of
wireless merger integration costs 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.

Wireless merger intangible amortization - Represents BellSouth's 40 percent
share of the non-cash amortization of intangibles, primarily customer lists that
were created in Cingular's acquisition of AT&T Wireless.

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 long-term debt in the first and second quarters of 2005.

Severance costs - Represents the net severance-related costs recorded in the
fourth quarter of 2005 associated with workforce reductions.

Deferred revenue adjustment - Represents the current recognition of $47 million
of previously deferred revenue in the Communications Group segment.  The
adjustment relates to a system coding error that resulted in underreporting
revenues in prior periods.  The amount accumulated over multiple years and did
not affect any one year by more than $9 million.


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
54.1 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 print and online directory
advertising through The Real Yellow Pages(R) and YELLOWPAGES.COMTM from
BellSouth(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 fourth 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
at www.bellsouth.com/investor 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
Web site at www.bellsouth.com/investor.  The webcast will be archived on our Web
site 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 Feb. 1, 2006, and can be accessed by dialing:
Domestic:  800-642-1687 - Conference ID: 3339634
International:  706-645-9291 - Conference ID: 3339634


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:

Brent Fowler, Media Relations at 404-249-2839

BellSouth Investor Relations at 800-241-3419


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