BLS Reports 2nd Qtr Results

Bellsouth Corp
22 July 2002



PART 1

For Immediate Release

July 22, 2002



For More Information Contact:

Jeff Battcher 404-713-0274



                   BellSouth Reports Second Quarter Earnings



July 22, 2002, ATLANTA - BellSouth Corporation (NYSE: BLS) reported earnings per
share (EPS) of 16 cents in the second quarter of 2002, compared to 47 cents in
the same quarter of 2001.  Normalized for special items (see below), EPS in the
second quarter of 2002 was 53 cents, compared to normalized EPS of 58 cents in
the same quarter a year ago.  Bad debt expense of $255 million in the second
quarter of 2002 impacted EPS an incremental 5 cents.



BellSouth's operating results continued to reflect weak demand for
communications services, both in the United States and Latin America.  The
impact of market share loss in the US, as well as currency devaluations in
Argentina and Venezuela, also affected results.  Business failures, including
those in the telecommunications industry, also continued to negatively affect
both demand and bad debt.  In addition, BellSouth did not recognize revenues for
wholesale services provided to a non-paying CLEC (Competitive Local Exchange
Carrier) customer operating in Florida, further reducing EPS by 1 cent.



Free cash flow (defined as cash flow from operations less capital expenditures)
totaled $1.4 billion in the second quarter of 2002, and $2.4 billion
year-to-date.  Total debt declined $1.0 billion during the second quarter, and
has been reduced $2.1 billion, or 10.4 percent, since the beginning of 2002.
Net debt is lower by 18.5 percent since the beginning of the year.



BellSouth adopted a new accounting rule for goodwill known as Financial
Accounting Standard No. 142 (FAS 142).  The new rule resulted in a non-cash
charge that reduced the value of goodwill on the company's balance sheet by
approximately $1.3 billion.  As required under the new rule, the effect of FAS
142 was recorded as an adjustment to BellSouth's first quarter 2002 results.



Communications Group

Total Communications Group revenues were $4.67 billion, compared to $4.79
billion in the second quarter of 2001, a decline of 2.4 percent.  Data revenues
were $1.08 billion, a growth rate of 6.0 percent compared to $1.01 billion in
the second quarter of the previous year.  Wholesale revenues from data transport
services for other communications providers increased approximately 4 percent.
Other data services, principally retail in nature, grew approximately 13
percent.  In addition to consumer and business DSL, retail data services include
transport, access, storage, security and Web hosting for business customers.



BellSouth added 74,000 new DSL customers in the second quarter, raising its
total to 803,000 retail and wholesale broadband customers at June 30.  This is
an annual growth rate of 111 percent.



Domestic Wireless / Cingular

BellSouth's domestic wireless revenues in the second quarter of 2002 were $1.5
billion, representing the company's 40 percent share of Cingular Wireless.  This
is a gain of 6.1 percent compared to the same quarter a year ago.  BellSouth's
share of Cingular operating income was $289 million in the quarter, compared to
$303 million in the same three months of 2001. Cingular ended the second quarter
with 22.2 million total Cellular/PCS customers, an annual growth rate of
approximately 5 percent.



In the second quarter of 2002, Cingular added 353,000 customers, spurred by the
introduction at the end of first quarter of several new national pricing and
service plans.  This compared to net adds of 234,000 in the first three months
of the year.



Latin America Group

Consolidated Latin America revenues were $598 million in the second quarter of
2002, a decline of 20.2 percent compared to the same period of the prior year.
Revenues reflected the impacts of currency devaluations, principally in
Argentina and Venezuela, as well as weak economic conditions in those countries.
Reflecting BellSouth's focus on profitability in this challenging environment,
operating margins increased to 33.1 percent from 32.6 percent in the second
quarter of 2001.  Free cash flow (FCF) for the Latin Segment was positive for
both the second quarter and first six months of 2002 and was significantly
higher than the same periods in 2001. BellSouth and its partners now serve a
total of 11.2 million customers in 11 Central and South American countries.



Additional Quarterly Highlights

Reported net income in the three months ended June 30, 2002 was $293 million,
compared to reported net income of $880 million in the second quarter of 2001.
Normalized net income in the second quarter of 2002 was $996 million, compared
to $1.085 billion in the same quarter a year ago.



Consolidated revenues, which do not include Cingular, were $5.78 billion in the
second quarter of 2002, compared to $5.99 billion in the same three months a
year earlier.  Consolidated total operating expenses increased 2.3 percent on a
reported basis, but, adjusted for the increased bad debt expense, were down 0.9
percent.  Normalized second quarter total operating revenues - which include
BellSouth's share of Cingular - were approximately $7.23 billion, a decline of
1.6 percent versus the second quarter of 2001.  Excluding the impacts of
currency devaluations in Argentina and Venezuela, and the book shifts that
benefited the Advertising and Publishing Group, normalized revenue was flat
compared to last year.



Special Items

In the second quarter of 2002, the difference between reported EPS of 16 cents
and normalized EPS of 53 cents is the result of three special charges:


Foreign currency transaction losses                      7 cents
Losses on equity investments                            19 cents
Workforce reduction                                     12 cents
     Effect of rounding                                   (1 cent)
              Total of special charges                  37 cents


Foreign currency transaction losses - Associated with the remeasurement of U.S.
dollar-denominated liabilities in Latin America.



Losses on equity investments - BellSouth recognized charges for the further
impairment and open market sales of its remaining investment in Qwest
Communications International; an impairment in the value of an investment in
Guatemala; and the liquidation of an investment in Crown Castle International
Corp.



Workforce reduction - As announced May 17, BellSouth is in the process of
reducing its workforce by approximately 5,000 positions to reduce operating
costs in response to a slow economy, increased competition and regulatory
pricing pressures.  The charge represents the accrual for severance payments and
employee benefit enhancements related to the workforce reduction.



Long Distance Launch

BellSouth launched long distance service in Georgia and Louisiana in late May.
In just over five weeks to the end of the quarter, the company acquired 147,000
consumer and business long distance customers, almost 4 percent of BellSouth's
residential customers in the two states.



2002 Guidance

The following updates to company guidance are provided for full year 2002:

Total operating revenue growth (including Cingular)                 -2% to -3%
Normalized earnings per share*                                      $2.13 to $2.20
Capital expenditures (excluding Cingular)                           $3.7 to $3.9 billion
Data revenue growth                                                 Mid-single digits
DSL high-speed Internet customers at 12/31                          1.0 million


*Includes effect of cessation of amortization of goodwill and indefinite-lived
assets under FAS 142.  Excludes foreign currency transaction gains or losses.



About BellSouth Corporation

BellSouth Corporation is a Fortune 100 communications services company
headquartered in Atlanta, GA, serving more than 44 million customers in the
United States and 14 other countries.



Consistently recognized for customer satisfaction, BellSouth provides a full
array of broadband data and e-commerce solutions to business customers,
including Web hosting and other Internet services.  In the residential market,
BellSouth offers DSL high-speed Internet access, advanced voice features and
other services.  BellSouth also provides online and directory advertising
services, including BellSouth(R) Real PagesSM.com.



BellSouth owns 40 percent of Cingular Wireless, the nation's second largest
wireless company, which provides innovative wireless data and voice services.



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

BellSouth will host a conference call with investors today at 10 a.m. Eastern
Time.  Participating on the call will be BellSouth CFO Ron Dykes and Investor
Relations Director Greg Peterson.  Dial-in information for the conference call
is:

Domestic:  888-370-1863

International:  706-634-1735



A replay of the call will be available beginning at approximately 1 p.m. Eastern
Time today, through July 29.  The replay can be accessed by dialing:

Domestic:  800-642-1687 - Reservation number:  4431730

International:  706-645-9291 - Reservation number:  4431730



In addition to historical information, this document contains 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 domestic or international 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 and (iv) 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.



More to follow...




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