June 30, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Attention: Jonathan G. Katz, Secretary Re: The Regulation of Securities Offerings (File No. S7-30-98) Release No. 33-7606 Ladies and Gentlemen: BellSouth Corporation appreciates the effort that has been made by the staff of the Commission in an attempt to modernize the securities offerings process, and we are pleased to file these comments. While the proposal is broad and the Commission has requested input on a wide range of issues, we do not attempt to comment on matters that would not directly impact BellSouth. We are a large, international corporation with an equity market capitalization of approximately $90 billion and our securities are actively traded on the New York and other domestic and foreign stock exchanges. Our public financing activities primarily consist of offering investment-grade debt off of shelf registration statements. FORM B The Commission proposes to significantly alter the shelf registration process under Rule 415 with its "file and go" concept embodied in the Form B proposal. The proposal would also require physical delivery of preliminary prospectuses or term sheets to investors prior to the time of pricing. We believe this proposal would add paperwork, procedures and delays to the offering of investment grade debt securities. Like many companies, BellSouth issues debt securities opportunistically, not on an established schedule. If we needed to issue debt securities on a particular date, we theoretically could arrange a Form B offering for that date by adding enough days to the process at the front end. However, we finance during market windows that offer opportunities to save, to the extent possible, basis points on spreads over U.S. Treasury securities. Because of volatility of debt markets, reflecting various economic, financial and political inputs, offering windows open and close quickly and often with little or no warning. The shelf offering process offers the ability to instantly price and sell when a window opens. Under the Form B process, the window might close while the Company is preparing and arranging to file the registration statement or amendment, forcing the Company into a less desirable, and certainly unknown, financing environment. Our shareholders, and indeed the market, will be penalized for this extra delay. We do not believe providing a written term sheet to investors is necessary to the Commission's objectives of promoting efficient capital formation and investor protection. Offerings by qualified Rule 415 issuers are primarily directed to institutional buyers, who currently receive vital information verbally, and would have little use for a form term sheet. Moreover, the potential difficulties in delivering term sheets to retail investors might be sufficient disincentive to issuers and underwriters to cause them to abandon that market. Current practices allow bond buyers to get the information they need to make an intelligent investment decision, and they receive a full warranty on their investment through delivery of the final prospectus. COMMUNICATIONS DURING THE OFFERING PROCESS The Commission has proposed new rules to allow investors more access to information prior to an offering. The central themes of the proposal are categorization of information, such as: "free writing," "offering information," "factual business communications," "regularly released forward-looking information," and the requirements to file and subject certain categories of information to liabilities under the 1933 Act. We have two primary concerns with the Commission's communications proposals. First, we find the proposals complex and technical. Considering the breadth and means of information provided today, we believe that companies will find it difficult at best to identify and file all necessary communications under the proposed rules. The distinction between categories of information also raises problematic legal issues by expanding liability in many cases, including severe penalties, including rescission, for failure to properly file offering materials. We believe this added risk would likely curtail the flow of information, an ironic twist on the proposal's intent to encourage more, not less, communications during the offering process. ACCELERATED PERIODIC REPORTING REQUIREMENTS The Commission has proposed two alternative approaches to accelerate the reporting of financial results. The first approach would require companies to report summary financial information (in compliance with the selected financial data requirements of Item 301 of Regulation S-K) on a Form 8-K filed on the date that a company issues an earnings Press Release. As an alternative, the Commission proposes accelerating the due dates of Forms 10-Q and 10-K. We support the Commission's efforts to ensure investors receive financial information in a timely manner. Our earnings press releases already contain the majority of the core financial information included in Forms 10-Q or 10-K, including comparative data. It has also been our practice to file a Form 8-K incorporating the earnings press release on the same day or the next business day. We do not believe, however, that the proposal to accelerate the due dates for Form 10-Q and 10-K is a practical solution to meet the Commission's objectives. In our opinion, the current due dates are reasonable given the amount of effort management requires to analyze its results of operations and prepare the necessary disclosures for inclusion in Forms 10-Q or 10-K. The timing problems would be exacerbated by the Commission's other proposals to have 10-Q filings prepared in time to allow circulation to, and review and feedback by, our full board of directors. SIGNATURE AND CERTIFICATION REQUIREMENTS The Commission has proposed new signature requirements for officers and directors who sign 1934 Act reports and registration statements to include a statement to certify that they have read the documents and that, to the best of their knowledge, the documents contain no material misstatements or misleading statements. The proposal also expands the number of persons required to sign Form 10-Q to include the principal executive officers and a majority of the board of directors. We believe that the certification statement proposed by the Commission is already implied by the signature on the Form 10-Q or registration statement and therefore is not necessary. It is our belief that specifically attesting to such a statement would not significantly improve the quality of disclosures included in the document. Our Vice President and Controller currently signs Form 10-Q. Various levels of executive management and the audit committee of the board of directors review nearly final drafts of the document. Our board of directors is directly responsible for appointing executive management and entrusts those persons charged with the responsibility of making the Company's Exchange Act and securities filings to diligently follow all of the applicable rules and regulations. We believe that requiring a majority of the board of directors sign Form 10-Q is not only impractical from a logistical and timing perspective but is also redundant. REPORTING ON FORM 8-K We generally support the Commission's recommendation to expand the types of reportable items under Form 8-K. We do not believe, however, that the recommendation for a one-day timeframe for certain circumstances would give management an adequate amount of time to determine that disclosure was required and to cause the appropriate filing to be made. We believe that a uniform, five business day requirement would fulfill the Commission's desire for timely disclosure, while at the same time allow management to properly and completely formulate adequate responses, with appropriate levels of legal, accounting and other necessary reviews. .............................. In conclusion, we have carefully reviewed the proposed release. Based on our conversations with other companies and professionals, we are skeptical as to whether the Commission has actually proposed a better scheme. We have commented on the major conceptual issues that would affect BellSouth. We strongly urge the Commission not to adopt the proposals described in this letter. If, however, the Commission determines to adopt some but not all of the proposed rules, we strongly suggest that it repropose a narrowed version so that commentators and affected parties can analyze that scheme in detail. Many aspects of the proposed release are worthy of further consideration but must be considered in the context of the new regulatory structure of which they would be a part. Respectfully submitted, /s/ Ronald M. Dykes Ronald M. Dykes Executive Vice President Chief Financial Officer