10-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

/x/      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

OR

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from                to                

COMMISSION FILE NUMBER 1-8607

BELLSOUTH CORPORATION

A GEORGIA CORPORATION I.R.S. EMPLOYER
NO. 58-1533433

1155 Peachtree Street, N.E., Room 15G03, Atlanta, Georgia 30309-3610
Telephone number 404 249-2000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS
See Attachment. NAME OF EACH EXCHANGE
ON WHICH REGISTERED
See Attachment.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

    None.

At February 1, 2001, 1,872,466,828 shares of Common Stock and Preferred Stock Purchase Rights were outstanding.

At February 1, 2001, the aggregate market value of the voting stock held by nonaffiliates was $78,905,752,132.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes /x/ No / /

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement dated March 13, 2001, issued in connection with the 2001 annual meeting of shareholders (Part III).

ATTACHMENT

Title of Each Class	Name Of Each Exchange On Which Registered
Common Stock (par value $1 per share) and Preferred Stock Purchase Rights	New York, Boston, Chicago, Pacific and Philadelphia Stock Exchanges
Support Obligations for Debt Securities:	New York Stock Exchange
Issued by BellSouth Capital Funding Corporation 7.12% Debentures due 2097 73/8% Quarterly Interest Bonds due 2039
Issued by Southern Bell Telephone and Telegraph Company Thirty-Nine Year 43/8% Debentures, due April 1, 2001 Forty Year 43/8% Debentures, due August 1, 2003 Thirty-Eight Year 6% Debentures, due October 1, 2004
Issued by BellSouth Telecommunications, Inc. Forty Year 81/4% Debentures, due July 1, 2032 Forty Year 77/8% Debentures, due August 1, 2032 Forty Year 71/2% Debentures, due June 15, 2033 Fifteen Year 57/8% Debentures, due January 15, 2009 Forty Year 63/4% Debentures, due October 15, 2033 Forty Year 75/8% Debentures, due May 15, 2035 Thirty Year 7% Debentures, due October 1, 2025 Fifty Year 5.85% Debentures, due November 15, 2045 One Hundred Year 7% Debentures, due December 1, 2095 Twenty Year 6.30% Amortizing Debentures, due December 15, 2015 Principal Amount of One Hundred Year 6.65%  Zero-To-Full Debentures, due December 15, 2095 Twelve Year 7% Notes, due February 1, 2005 Ten Year 61/4% Notes, due May 15, 2003 Eleven Year 63/8% Notes, due June 15, 2004 Ten Year 61/2% Notes, due June 15, 2005 6% Reset Put Securities, due June 15, 2012 Thirty Year 63/8% Debentures, due June 1, 2028

TABLE OF CONTENTS

Item				Page
PART I
Cautionary Language Concerning Forward-Looking Statements				3
	1. Business			4
		General		4
		Wireline Communications		5
		Domestic Wireless		13
		International Operations		16
		Advertising and Publishing		20
		All Other Businesses		20
		Research and Development		21
		Employees		21
	2. Properties			22
		General		22
		Capital Expenditures		22
	3. Legal Proceedings			23
	4. Submission of Matters to a Vote of Shareholders			24
Additional Information—Description of BellSouth Stock				25
Executive Officers				27
PART II
	5. Market for Registrant's Common Equity and Related Stockholder Matters			28
	6. Selected Financial and Operating Data			29
	7. Management's Discussion and Analysis of Financial Condition and Results of Operations			30
		Consolidated Results of Operations		30
		Results by Segment		34
			Wireline Communications	35
			Domestic Wireless	37
			International Operations	38
			Advertising and Publishing	40
			All Other Businesses	40
		Financial Condition		41
		Quantitative and Qualitative Disclosure About Market Risk		42
		Operating Environment and Trends of the Business		43
		Cautionary Language Concerning Forward-Looking Statements		45
	8. Consolidated Financial Statements			46
		Report of Management		46
		Report of Independent Accountants		47
		Consolidated Statements of Income		48
		Consolidated Balance Sheets		49
		Consolidated Statements of Cash Flows		50
		Consolidated Statements of Shareholders' Equity and Comprehensive Income		51
		Notes to Consolidated Financial Statements		52
	9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			76

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PART III
	10. Directors and Executive Officers of the Registrant	76
	11. Executive Compensation	76
	12. Security Ownership of Certain Beneficial Owners and Management	76
	13. Certain Relationships and Related Transactions	76
PART IV
	14. Exhibits, Financial Statement Schedules and Reports on Form 8-K	76
	Signatures	80
	Consent of Independent Accountants	81

PART I

Cautionary Language Concerning Forward-Looking Statements

In addition to historical information, this document contains forward-looking statements regarding events and financial trends that may affect our future operating results, financial position and cash flows. These statements are based on our assumptions and estimates and are subject to risks and uncertainties. For these statements, we claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.

There are possible developments that could cause our actual results to differ materially from those forecast or implied in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which are current only as of the date of this filing. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

While the below list of cautionary statements is not exhaustive, some factors that could affect future operating results, financial position and cash flows and could cause actual results to differ materially from those expressed in the forward-looking statements are:

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a change in economic conditions in domestic or international markets where we operate or have material investments which would affect demand for our services;



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significant deterioration in foreign currencies relative to the U.S. dollar in foreign countries in which we operate;



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changes in U.S. or foreign laws or regulations, or in their interpretation, which could result in the loss, or reduction in value, of our licenses, concessions or markets, or in an increase in competition, compliance costs or capital expenditures;



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a decrease in the growth rate of demand for the services which we offer;



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the intensity of competitive activity and its resulting impact on pricing strategies and new product offerings;



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protracted delay in our entry into the interLATA long distance market;



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higher than anticipated start-up costs or significant up-front investments associated with new business initiatives;



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unanticipated higher capital spending from, or delays in, the deployment of new technologies; and



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the impact of the wireless joint venture with SBC Communications, known as Cingular Wireless, including marketing and product development efforts and financial capacity.

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BUSINESS

GENERAL

In this document, BellSouth Corporation and its subsidiaries are referred to as "we" or "BellSouth".

We are a Fortune 100 communications services company providing voice and data services to more than 44 million customers in the United States and 16 other countries. We provide an array of broadband data and e-commerce solutions to business customers, including Web hosting and other Internet services. In the residential market, we offer DSL high-speed Internet access, advanced voice features and other services. We also provide online and directory advertising services, including BellSouth® Real Pages^SM.com. We own 40 percent of Cingular Wireless (Cingular), the nation's second largest wireless company, which provides wireless data and voice services. With one of the largest shareholder bases in America, we have assets of approximately $51 billion and employ approximately 104,000 individuals. Our principal executive offices are located at 1155 Peachtree Street, N.E., Atlanta, Georgia 30309-3610 (telephone number 404 249-2000). We are incorporated under the laws of the State of Georgia.

We were incorporated and became a publicly traded company in December 1983 as a result of the breakup of the Bell System. The breakup also created several other local exchange companies, which are referred to as Baby Bells in this document. From 1983 through 1996, the services which we and the other Baby Bells could offer were governed by the settlement terms of the antitrust suit which led to the breakup of the Bell System. Under the terms of that settlement, we could provide local exchange, network access, information access and long distance telecommunications services within assigned geographical territories, termed Local Access and Transport Areas (LATAs). Although prohibited from providing wireline service between LATAs, we were allowed to provide network access services that linked our customers' telephone or other equipment in one of our LATAs to the transmission facilities of other, nonaffiliated carriers, which provided telecommunications services between LATAs.

The Telecommunications Act of 1996 supersedes the governing terms of the 1983 settlement and provides for the development of competition in local telecommunications markets and the conditions under which the Baby Bells can provide interLATA wireline telecommunications and other services. Our ability to enter businesses previously proscribed to us by the terms of the 1983 settlement is, however, subject to compliance with the Telecommunications Act of 1996 and the regulations of the Federal Communications Commission (FCC).

We are subject to increasing competition in all areas of our business. Regulatory, legislative and judicial actions and technological developments have expanded the types of available services and products and the number of companies that may offer them. Increasingly, this competition is from large companies and joint ventures that have substantial capital, technological and marketing resources and are subject to fewer regulatory constraints.

We have three major asset groupings that are the focus of our business. Those groupings, and our key strategies for those groupings are listed below:

WIRELINE COMMUNICATIONS. Grow by solidifying our company as the leading choice of customers for an expanding array of voice, data, Internet and advertising services, and meeting their national needs through organic expansion and teaming arrangements with other companies.

DOMESTIC WIRELESS. Through our investment in Cingular, grow the domestic wireless business profitably by capitalizing on nationwide coverage to obtain new customers, developing new plans and services to retain all customers, and controlling costs through both economies of scale and streamlining of business processes.

INTERNATIONAL. In Latin America, become the leading wireless communications provider by expanding and diversifying our existing operations and investing in new businesses in areas with significant potential for market growth. In Europe and Asia, maximize the value of our investments in existing operations.

See note K to our consolidated financial statements for financial data on each of our segments.

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WIRELINE COMMUNICATIONS

BUSINESS OPERATIONS

GENERAL

Through our BellSouth Telecommunications, Inc. (BST) subsidiary, we are the predominant telephone service provider in the southeastern U.S. serving substantial portions of the population within Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. We provide wireline communications services, including local exchange, network access and intraLATA long distance services. Wireline communications operations generated 71% of our total operating revenues for 1998 and 69% for 1999 and 2000.

While we provide telephone service to the majority of the metropolitan areas in our region, there are many localities and sizable geographic areas within the region that are served by nonaffiliated telecommunications carriers. In addition, there is increasing competition for business customers and residential customers within our territory from other telecommunications carriers, including cable television operators.

Our business strategy is to grow by solidifying BellSouth as the leading choice of customers for an expanding array of voice, data and Internet services through BST and other BellSouth subsidiaries and to meet our customers' national needs through organic expansion and teaming arrangements with other companies. Our customers are increasingly demanding bundled offerings of services, and we seek to offer a wide array of services consisting of combinations and prices responsive to our customers' needs.

We have organized our marketing efforts to parallel our four major customer bases: consumer, small business, large business and interconnection services.

Consumer. This unit serves the largest segment of the market within our region, the residential customer. While traditional telephone service remains the core of this market, customer demands are rapidly broadening to include an expanded range of standard services, from convenience features such as caller ID, call forwarding and voice mail, to secondary lines, dial-up access to the Internet, high-speed digital subscriber lines and video services.

Small Business. This unit focuses on providing, in addition to traditional voice services, advanced voice, data, Internet and networking solutions to small and medium-sized businesses. It offers a full selection of standard and customized communications services to this market.

Large Business. This unit provides a wide range of standard and highly specialized services and products to large and complex business customers. In addition to traditional voice services, product and service offerings to these customers include Internet access, private networks, high-speed data transmission, conferencing and industry-specific communications arrangements.

Interconnection Services. This unit provides interconnection to our network and other related wholesale services to telecommunications carriers for use in providing services to their customers. Other services provided to these carriers include voice and data, as well as advanced products and transport services. The unit provides services to both affiliated and nonaffiliated customers in six different carrier markets:

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wireless service providers,

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competitive local exchange carriers,

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competitive switched and special access providers,

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long distance carriers,

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information service providers and

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public payphone service providers.

LOCAL SERVICE

Local service operations provide lines from our exchange offices to customers' premises for the origination and termination of telecommunications, including the following:

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basic dial-tone local telephone service provided through the regular switched network;

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dedicated private line facilities for voice and special services, such as transport of data and video;

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switching services for customers' internal communications through our facilities;

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services for data communications, which include managing and configuring special service networks; and

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dedicated low- or high-capacity public or private digital networks.

We also offer various standard convenience features, such as caller ID, call waiting, call return and 3-way calling on a monthly subscription or per-use basis. Additional local service revenues are derived from charges for inside wire maintenance contracts, voice messaging services, directory assistance and public payphone services.

We currently offer local payphone services through a subsidiary of BST. We plan to sell or take out of service all of our 143,000 public payphones by the end of 2002. We expect that any charge that we may take with respect to exiting this business will not be material.

NETWORK ACCESS

We provide network access and interconnection services by connecting the equipment and facilities of our subscribers with the communications networks of long distance carriers, competitive local exchange carriers, competitive switched and special access providers, and wireless providers, including Cingular. These connections are provided by linking these carriers and subscribers to our public switched network through dedicated services and facilities. As a result of access reform, the revenues which we derive from these services has diminished over the past several years. See "Regulation—Network Access" for a discussion of this matter.

LONG DISTANCE

We provide limited long distance services within, but not between, areas within our local service territory that were defined at the time the Bell System was broken up in 1984. These services include:

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service beyond the local calling area,

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Wide Area Telecommunications Service (WATS or 800 services) for customers with highly concentrated demand, and

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special services, such as transport of data and video.

Revenues from these services have decreased as competition for customers has intensified and as more customers have subscribed to our wider local area calling plans. We expect that long distance revenues will continue declining until we receive permission from the FCC to provide full long distance services.

The Telecommunications Act of 1996 restricts Baby Bell companies from providing full long distance wireline communications in their original service areas or regions, and establishes procedures for the removal of restrictions. We and other companies subject to these restrictions—Verizon Communications, which resulted from the merger of GTE Corporation and Bell Atlantic; SBC Communications; and Qwest Communications International, which merged with US West—may apply to the FCC on a state-by-state basis to offer full long distance wireline service in our respective regions. The FCC must act on each application within 90 days. The FCC must grant the application if it determines, among other things, that the applicant has:

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Met a competitive checklist establishing that it has opened its network to competitive carriers; and

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Shown:

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The presence of a facilities-based competitor offering both residential and business local services; or

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If there is no such competitor, a statement that has been approved or permitted to take effect by state regulatory authorities of the terms under which the company would be willing to interconnect with a competitive local exchange carrier; and

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Its application is consistent with the public interest.

The FCC is required to consult with state regulatory authorities and the U.S. Department of Justice when reviewing an application.

We believe that, in order to remain competitive, we must aggressively pursue a corporate strategy of expanding service offerings beyond our traditional businesses and markets. These offerings include local and full long distance wireline voice, information and data communications. We plan to begin offering full long distance wireline service in each of our southeastern states as soon as the FCC approves our application for each state.

Between December 1999 and January 2001, the FCC has approved Verizon Communications' request to provide full long distance wireline service in New York and SBC Communications' application to provide full long distance services in Kansas, Oklahoma and Texas. We are currently conducting third-party tests of our operating support systems in Georgia and Florida and expect to submit to the FCC applications to offer full long distance wireline service in Georgia, Florida and

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our other states when testing and verification of our performance data are complete.

We have a three-pronged approach to gain full long distance relief under the Telecommunications Act of 1996:

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Continue to modify our facilities and operation support systems to facilitate competition and aggressively seek approvals from the FCC and state commissions;

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Seek judicial review of adverse decisions that we believe to be erroneous; and

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Participate in actions by Congress to urge the FCC to implement the Telecommunications Act of 1996 in a timely fashion.

Because of the scrutiny of applications by the state commissions, the FCC and the Justice Department, the time required to obtain judicial review of adverse decisions and the possible challenges by other carriers of any approved applications, it is uncertain when we will be authorized to commence full long distance service over our wireline network.

In April 1999, we bought a $3.5 billion equity stake in Qwest Communications and formed a strategic commercial relationship with it to facilitate the offering of a full set of integrated digital data, image and voice communications services to our business customers. Under the agreement, we immediately began the coordinated marketing of our respective services, with Qwest offering its full portfolio of long distance, data networking, Internet and voice services. Once we are allowed to provide full long distance wireline service, Qwest and BellSouth have agreed to jointly develop and deliver a comprehensive set of end-to-end high-speed data, image and voice communications services to business customers, with an emphasis on broadband and Internet-based services. In January 2001, we sold back to Qwest $1 billion of its stock, and agreed to buy $250 million worth of Qwest's services over the next five years and to use other Qwest shares to pay for those services over four years. Our stake in Qwest is currently about 3.1% of the company.

DIGITAL AND DATA

A key component in our growth in local service and network access revenues is the provision of digital and data services to all of our customer groups. These services and products are provided primarily over non-switched access lines that typically have significantly greater capacity per line than a traditional switched access line. These lines are well suited for high-capacity applications that previously could not be provided over traditional switched access lines. Uses of these lines include bulk data transmission, video conferencing, automated teller machines, or ATMs, check/credit card authentication, multimedia and interconnection with wireless networks.

During 2000, data telecommunications represented approximately two-thirds of the traffic on our wireline network, and we believe that the amount of our business derived from data will continue to increase. To capitalize on the transition from voice to data, we will have to expand significantly our capabilities in the data communications market. We have continuously updated our network with new advances in digital technology. Our deployment of broadband services and upgraded systems enables us to provide high-speed Internet access and entertainment services. These services also utilize new technologies that provide for the simultaneous, high-speed transport of voice, data, still images and video.

A key part of our data strategy is the offering of dial-up and dedicated Internet and intranet connections to consumers and businesses. This service is deployed on local Internet protocol networks across the southeastern U.S., whereby customers have access to a variety of public-switched and dedicated networking capabilities to meet their data communications, electronic commerce, web design and hosting and customer network management needs. We provided Internet services to approximately 1,000,000 customers at December 31, 2000.

Over the last several years, the demand for high-speed access to the Internet has increased substantially. Although fiber optics in our core network is well suited to provide high-speed access, the traditional switched access lines which connect many businesses and most residences to our network are not capable, in their original state, of delivering high speed access. In response, we have deployed digital subscriber line (DSL) products which enhance the existing switched lines and provide Internet access speeds up to 1.5 Megabits per second, up to 30 times faster than today's fastest dial-up modems. We offer these DSL products to other carriers and to Internet service providers who use these products to provide Internet services to their customers. We also offer Internet access services using these DSL products directly to our customers in 46 markets under the name FastAccess® service. We offer our FastAccess customers a self-install kit for these products, and about 75% of all installations successfully utilize the self-install option.

We have approximately 10.3 million access lines qualified to offer DSL and ended 2000 with 215,000 customers served over our DSL facilities. We plan to

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increase our coverage to approximately 16.0 million qualified access lines and the total customers served over our DSL facilities to 600,000 by the end of 2001.

For over a decade, fiber optics has been our choice of technology as we have upgraded our core network to meet the demand for data, and over 90% of our customers are within 12,000 feet of fiber optic cables. Since 1995, we have outfitted new housing developments totaling nearly 500,000 homes with fiber systems. Of these, some 200,000 will have access to high-speed Internet and video services provided by an integrated fiber architecture, which we began deploying in Atlanta and south Florida during 1999. Integrated fiber also enables the delivery of 160 channels of digital entertainment in Atlanta and south Florida.

Data communications provided over wireline facilities are generally subject to the same laws and regulations as fixed line voice communications. As a result, under current FCC interpretations, we are generally prohibited from providing full long distance data telecommunications services. While our commercial relationships with companies such as Qwest provide our customers with alternative access to full long distance services, we believe that our entry into the long distance business remains critical to our successfully competing in the data services business.

OTHER WIRELINE

Other wireline revenues are comprised primarily of charges for billing and collection services for long distance carriers, provision of separate network elements to competitors, collocation of competitors' equipment in our facilities, enhanced white pages listings, customer premises equipment sales and maintenance services. Beginning in fiscal 2000, other wireline also includes amounts received from the universal service fund for support of high-cost areas.

REGULATION

FEDERAL REGULATORY MATTERS

Network Access

The FCC regulates rates and other aspects of carriers' provision of interstate telecommunications services. State regulatory commissions have jurisdiction over carriers' provision of intrastate telecommunications services on their networks.

Historically, network access charges paid by other carriers were set at levels that subsidized the cost of providing local residential service. The Telecommunications Act of 1996 requires that the FCC identify and remove the historical implicit local service subsidy from network access rates, arrange for a universal service fund to ensure the continuation of service to high-cost, low-income service areas and develop the arrangements for payments into that fund by all carriers.

Price Regulation

The FCC regulates interstate prices using a price regulation plan, which is known as a "price cap" plan. The FCC's price cap plan limits aggregate price changes to the rate of inflation, minus a productivity offset, plus or minus other cost changes recognized by the FCC. In May 1997, the FCC adopted orders regarding revisions to the price cap plan, access charge reform and the establishment of the universal service fund. The orders on the price cap plan and access charge reform resulted in access rate reductions related to per-minute-of-use charges and increases to per-line charges. We have been pricing our services based on a 6.5% productivity factor, which means that price increases could only occur to the extent that the gross domestic product price index of the U.S. increased by greater than 6.5% over an annual period. If the Index increases by less than 6.5%, we would reduce prices. Interstate prices have been decreasing over the last few years as a result of low inflation in the U.S. economy.

In May 1999, the U.S. Court of Appeals for the District of Columbia Circuit overturned the FCC's order establishing the 6.5% productivity factor and remanded the matter to the FCC. In November 1999, the FCC initiated a rulemaking proceeding to review the 6.5% productivity factor. Any increase in this factor could result in reductions of network access charges paid to BellSouth by other carriers, subscribers or both.

Access Charge Reform

Federal policies being implemented by the FCC strongly favor access reform, whereby the historical subsidy for local service that is contained in network access charges paid by long distance carriers is eliminated. Unless permanent compensatory changes are adopted, such as universal service fund contribution mandates, our revenues from this source could be at risk. In addition, other aspects of access charge regulation and universal service fund contribution requirements that are applicable to local exchange telephone companies are also under consideration and could result in increased expense levels or reduced revenues.

In May 2000, the FCC released an order designed to result in lower consumer prices for long distance service by reforming the way in which access costs are recovered. The order applies to all local exchange carriers operating under price caps, and as such covers BellSouth. The order sets the productivity factor

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equal to inflation for services that meet price targets as specified in the order. Although the order reduces the access charges paid to BellSouth by other carriers, we are able to increase subscriber line charges paid by residential and single-line business customers each year through 2003. Any increases which we request after July 2001 are subject to a cost review. During 2000, we filed tariff modifications implementing the order. These modifications will result in interstate price decreases of approximately $274 million from July 2000 until June 2001.

Pricing Flexibility

In August 1999, the FCC released an order regarding pricing flexibility for certain interstate services. Under these new rules, local exchange carriers operating under price caps can obtain pricing flexibility relief on a Metropolitan Statistical Area (MSA) basis for switched access and special access services once the carrier demonstrates that certain competitive triggers have been satisfied, as established in the order. Phase I relief includes the ability to offer volume and term discounts and contract tariffs on one day's notice. Phase II relief includes the removal of services from all price regulation, including price cap regulation and access rate regulation.

In August 2000, we filed a pricing flexibility petition for special access and dedicated transport services seeking Phase I and Phase II relief in up to 39 MSAs. In December 2000, the FCC granted our petition. In August 2000, we also filed a pricing flexibility petition for switched access services seeking Phase I relief in 10 MSAs. In February 2001, the FCC granted our request for Phase I relief in 8 of the 10 MSAs.

Universal Service

The FCC's universal service order established funding mechanisms for high-cost and low-income service areas. We began contributing to the new funds in 1998 and, as provided for in the order, are recovering our contributions through increased interstate charges to retail end users.

The FCC's universal service mechanism for non-rural carriers serving high-cost areas is designed to ensure that customers in those areas receive telephone service at affordable rates. We began receiving support for service to residents in Alabama, Kentucky, Mississippi and South Carolina in January 2000.

The universal service order also established significant discounts to be provided to eligible schools and libraries for all telecommunications services, internal connections and Internet access. It also established support for rural health care providers so that they may pay rates comparable to those that urban health care providers pay for similar services. Industry-wide annual costs of the program, estimated at approximately $2.3 billion, are to be funded out of the universal service fund. Local and long distance carriers' contributions to the education and health care funds are assessed by the fund administrator on the basis of the carriers' interstate end-user revenues.

STATE REGULATORY MATTERS

We are subject to regulation of our local and limited long distance services by a state authority in each state where we provide intrastate telecommunications services. Such regulation covers prices, services, competition and other issues.

Price Regulation

We currently operate under price regulation plans in all states in our wireline territory. Under these plans, the state regulatory commissions or state legislatures have established maximum prices that can be charged for certain telecommunications services. While such plans limit the amount of increases in prices for specified services, they enhance our ability to adjust prices and service options to respond more effectively to changing market conditions and competition. Price regulation also provides an opportunity to benefit more fully from productivity enhancements. The majority of these plans have limitations on raising prices for basic local exchange services during the early years with provisions for inflation-based price increases in later years.

While some plans are not subject to either review or renewal, other plans contain specified termination dates and/or review periods. In July 2000, the Kentucky Public Service Commission approved a new price regulation plan. The new plan eliminates the 4% productivity factor contained in the previous plan in return for the company's commitment to bring high-speed access services to certain rural areas. The level of company investment in rural high speed access services is under review at the Commission. The plan also permits the company to rebalance rates in a manner that will align residential rates more closely to the cost of providing such service.

In September 2000, the North Carolina Utilities Commission approved, with modifications, a Joint Stipulation among BellSouth, AT&T and Public Staff. The Commission's order provides for access charge reductions, service quality penalties, expanded ADSL deployment and modification of the price regulation plan including a provision that the plan will be reviewed on or before June 2002.

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The plans in Louisiana and Mississippi were reviewed in 1999. In Louisiana, the existing plan was extended and the cap on interconnection services was extended from 3 to 5 years. In Mississippi, the review did not result in any changes to the existing plan. The Mississippi plan calls for another review by July 2001, at which time renewal of the plan will be considered. Upon review or renewal, a regulatory commission could require substantial modifications to prices and other terms of these plans.

Beginning in 1996, we operated under a price regulation plan approved by the South Carolina Public Service Commission under existing state laws. In April 1999, however, the South Carolina Supreme Court invalidated this price regulation plan. In July 1999, we elected to be regulated under a new state statute, adopted subsequent to the Commission's approval of the earlier plan. The new statute allows telephone companies in South Carolina to operate under price regulation without obtaining approval from the Commission. The election became effective during August 1999. The South Carolina Consumer Advocate petitioned the Commission seeking review of the level of our earnings during the 1996-1998 period when we operated under the subsequently invalidated price regulation plan. The Commission voted to dismiss the petition in November 1999 and issued orders confirming the vote in February and June of 2000. In July 2000, the Consumer Advocate appealed the Commission's dismissal of the petition.

Other State Regulatory Matters

In 2000, the Florida Public Service Commission commenced a proceeding to determine whether we violated certain Commission rules regarding service quality. Hearings are scheduled for May 2001. Also in 2000, the Commission adopted a staff recommendation that our change in 1999 from a late charge based on a percentage of the amounts overdue to a flat rate fee plus an interest charge violated the Florida price regulation statute and voted that certain monies should be refunded. We protested the decision and the Commission should issue a decision in mid-2001.

In January 2001, the Georgia Public Service Commission entered an order adopting new company performance measures, which will be used as one means to assess our wholesale service quality to competitive local exchange carriers. In addition, the Commission adopted a Self Enforcement Plan. The Enforcement Plan consists of three tiers. Under tier 1, we will be required to pay remedial sums to individual competitive local exchange carriers if we fail to meet certain performance criteria set by the Commission. Under tier 2, we will pay additional sums directly to the State Treasury for failing to meet certain performance metrics. Under tier 3, if we fail to meet certain performance criteria, then we will suspend additional marketing and sales of long distance services allowed by the Telecommunications Act of 1996. Our annual liability under the Plan will be capped at 44% of net revenues in Georgia. The decision also adopts other remedial measures for the filing of late or incomplete performance reports, and a market penetration adjustment for new and advanced services, which increases the amount of the payments where low volumes of advanced or nascent services are involved. The Enforcement Plan is expected to go into effect on March 1, 2001. BST has sought reconsideration of aspects of the Commission's order which, if granted, may lower our exposure under the Plan.

COMPETITION

LOCAL SERVICE

The Telecommunications Act of 1996 requires the elimination of state and local legislative and regulatory barriers to competition for interstate and intrastate telecommunications services, subject only to competitively neutral requirements to preserve and advance universal service, protect the public safety and welfare, maintain the quality of telecommunications services and safeguard the rights of customers. The Telecommunications Act of 1996 also includes requirements that incumbent local exchange carriers, such as BST, negotiate rates, terms and conditions with other carriers regarding interconnection, the provision of access to unbundled network elements, the payment of compensation for local calls terminating on the network of a carrier other than the originating carrier, the resale of telecommunications services and the provision of physical collocation of equipment in the incumbent carriers' facilities. If a negotiated agreement cannot be reached, either party may seek arbitration with the state regulatory authority or the FCC if the state fails to act. If rates are disputed, the arbitrator must set rates based on cost, which may include a reasonable profit. Incumbent carriers are also required to negotiate wholesale rates for the purpose of making telecommunications services available for resale by competing carriers. If an agreement cannot be reached, the arbitrator must set the wholesale rates at the incumbent carriers' retail rates, less costs that are avoided. We are continually negotiating and executing interconnection and resale agreements with other carriers. Many of the negotiations result in arbitration before the state public service commissions.

The state public service commissions with jurisdiction over our services have granted numerous applications to competitive local exchange carriers for authority to

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offer local telephone service. As a result, substantial competition has developed for our business customers, which provide a greater concentration of higher margin revenues than our residential customers. Competitors include major carriers which resell our local services, use separate network elements or provide services over their own facilities.

At December 31, 2000, we had provisioned approximately 1.3 million equivalent access lines to competing carriers for resale, an increase of 60.3 percent since December 31, 1999.

FCC Interconnection Order

In connection with the requirements of the Telecommunications Act of 1996, the FCC has adopted rules governing interconnection and related matters. With regard to setting the price of interconnection between incumbent carriers and other carriers, the FCC has jurisdiction to set pricing standards to be implemented by the state commissions. The FCC has prescribed a forward-looking economic cost approach for pricing interconnection and the separate, unbundled network elements, such as the use of the customer access line, the central office switch and other properties that together constitute what a carrier needs to provide telecommunications service.

In July 2000, the U.S. Court of Appeals for the Eighth Circuit vacated the FCC methodology for pricing unbundled network elements and the methodology for determining wholesale rates for retail services. The order also affirmed the previous decision of the Eighth Circuit that vacated FCC rules that required incumbent carriers to combine previously uncombined elements for requesting carriers. In January 2001, the U.S. Supreme Court agreed to hear in October 2001 several appeals from the order of the U.S. Court of Appeals.

Access to proprietary network elements can be required only when necessary or, in the case of a non-proprietary element, when the failure to provide access would impair the ability of the requesting carrier to provide services. Based on a U.S. Supreme Court decision in 1999, the FCC has issued an order adopting a revised list of network elements that incumbent carriers must make available to competitors.

The FCC's list, together with its regulations prohibiting incumbent carriers from separating currently combined elements, means that incumbent carriers are required to provide certain combinations of network elements that competitors may substitute for certain higher priced incumbent carriers' services. This substitution could lead to further increases in competition for certain local exchange access services and materially reduce the incumbent carrier's access charge revenues. The FCC determined that, for an interim period, it would not apply these new rules to allow the substitution of certain network elements for special access services unless the telecommunications carrier provides a significant amount of local exchange services. The FCC has commenced a proceeding into the use of network element combinations to provide certain special access services.

The FCC's list does not require incumbent carriers to make available to competitors some network elements used to provide advanced data services, except in very limited circumstances. This outcome reduces a disincentive to the incumbent carriers to invest in these rapidly expanding services.

The FCC has adopted an "all elements" rule, which allows competing carriers to provide local telephone service relying solely on the elements in an incumbent carrier's network, and has refused to impose a requirement of facility ownership on carriers that seek to lease network elements. The FCC has forbidden incumbent carriers from separating already combined network elements before leasing them to a competitive local exchange carrier. The FCC has also adopted a "pick and choose" rule which requires that incumbent carriers make available to requesting competitive local exchange carriers contractual provisions, including related rates and terms, contained in any other agreements that have been previously approved by the state commission for that same state. Exceptions are allowed when the incumbent carrier can prove to the state commission that providing the particular item requested is either more costly than providing it to the original carrier or is technically infeasible. These rulings may make it easier for a competitive local exchange carrier to compete with us.

In complying with the technical requirements of interconnection, BST is incurring, and expects to continue to incur, significant costs associated with the facilitation of interconnection. BST incurred approximately $650 million of costs associated with these efforts in 2000. Of this amount, approximately $320 million was expensed as incurred, and the remainder was capitalized. Total costs incurred through December 31, 2000 were approximately $1.8 billion.

An increasing number of voice and data communications networks utilizing fiber optic lines have been and are being constructed by communications providers in all major metropolitan areas throughout our wireline service territory. These networks offer high-volume users a competitive alternative to our public and private line offerings. Furthermore, wireless voice and paging services, and Internet services (including all of such services being provided by our companies) increasingly compete with wireline

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communications services. These wireless services are provided by a number of well-capitalized entities in most of our markets. Technological developments have made it feasible for cable television networks to carry data and voice communications, and, as such, we face increased competition within our region from cable television ventures.

During 1998, the FCC adopted an order that will allow telecommunications carriers to recover over five years their carrier-specific costs of implementing long-term number portability, which allows customers to retain their local telephone numbers in the event they change local carriers. The order allows for such cost recovery in the form of a surcharge from customers to whom number portability is available. The surcharge began during second quarter 1999. It remains unclear to what degree, if any, we will be compensated for the noncarrier-specific costs of implementing long-term number portability.

Federal and state policies strongly favor further changes to the networks and business operations of incumbent carriers to encourage telecommunications services competition. The FCC has considerable authority to establish pricing, interconnection and other policies that had once been considered within the exclusive jurisdiction of the state public service commissions. We expect the FCC to continue to pursue policies that promote local service competition. We are losing market share with respect to business customers, particularly small business customers. Our business customers produce higher profit margins for us than our residential customers. Competition for local service revenues could adversely affect our results of operations if lost revenues are not offset by long distance revenues arising from our being authorized to offer in-region full long distance wireline service as contemplated in the Telecommunications Act of 1996, or from revenues arising from our other initiatives, such as data and broadband services. It is uncertain when we will be authorized to offer in-region full long distance wireline service.

NETWORK ACCESS

FCC rules require us to offer expanded interconnection for interstate special and switched network access transport. As a result, we must permit competitive carriers and customers to terminate their transmission lines on our facilities in our central office buildings and other locations through collocation arrangements. The effects of the rules are to increase competition for network access transport. Furthermore, long distance carriers are increasingly connecting their lines directly to their customers' facilities, bypassing our networks and thereby avoiding network access charges entirely. In addition, commercial applications of Internet telephony are being developed. This medium could attract substantial traffic because of its lower cost structure due to the fact that FCC rules do not currently impose access charges on most Internet communications.

LONG DISTANCE

A number of companies compete with us in our nine-state region for the limited long distance business that we are permitted to conduct. These companies compete by reselling long distance services obtained at bulk rates from us or providing long distance services over their own facilities. Since February 1999, we have made 1+ dialing parity available in all of the nine states in our region. This feature allows customers to choose a competing long distance carrier without having to dial a special access code.

The Telecommunications Act of 1996 permits all incumbent local exchange carriers such as Verizon, Qwest, SBC Communications and BellSouth, to offer full long distance service outside of the states containing their incumbent local wireline service territories. Many of these carriers have announced plans to compete for all long distance service in our territory. In addition, SBC, AT&T, WorldCom, Sprint and other carriers currently provide long distance service to our local service customers.

FRANCHISES AND LICENSES

Our local exchange business is typically provided under certificates of public convenience and necessity granted pursuant to state statutes and public interest findings of the various public utility commissions of the states in which we do business. These certificates provide for franchises of indefinite duration, subject to the maintenance of satisfactory service at reasonable rates. The Telecommunications Act of 1996 provides that these franchises must be non-exclusive.

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DOMESTIC WIRELESS

OVERVIEW

During the fourth quarter of 2000, we contributed our domestic wireless operations to a joint venture with SBC Communications and formed Cingular. Cingular is managed independently from both parents, currently with a four-seat Board of Directors comprised of two seats from each parent. BellSouth and SBC share control of Cingular. BellSouth has an approximate 40% interest in Cingular, and SBC has an approximate 60% interest.

Cingular is the second-largest provider of advanced wireless voice and data communications services in the United States, with over 19 million U.S. wireless subscribers in over 260 markets.

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Voice—Cingular offers wireless voice and data communications services across an extensive U.S. footprint, providing cellular and PCS services in 43 of the 50 largest U.S. metropolitan areas, and holding licenses for cellular and PCS services covering 190 million POPs, or approximately 70% of the U.S. population. Cingular operates one of the largest and most digitalized U.S. wireless networks, with over 90% of its existing cellular and PCS networks utilizing digital technology, and over 95% of the potential customers being covered in licensed territories. Cingular also currently provides interactive messaging services over its cellular and PCS networks to over 200,000 subscribers.

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Data—Cingular provides end-to-end wireless data solutions for businesses and individuals, and operates a digital packet-switched 900 MHz wireless network covering a population of approximately 184 million people in major U.S. cities, including all of the 50 largest metropolitan areas. Cingular serves over 570,000 wireless data subscribers, and provides wireless data services to 170 of the Fortune 1000 companies. Cingular has entered into strategic relationships with leading data-services and Internet companies, including AOL, Palm, Inc., RIM, Sun Microsystems and Microsoft Corp.

BUSINESS STRATEGY

Cingular's goal is to be the premier national provider of advanced wireless voice and data services in the United States. To accomplish this goal, Cingular intends to:

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promote the Cingular brand, beginning with a national rebranding campaign launched in January 2001, in order to promote its image as a national, high-quality provider with a comprehensive service offering;

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expand its existing footprint and network capacity by obtaining access to additional spectrum through FCC auctions, spectrum exchanges, selective acquisitions, joint ventures and alliances;

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improve its market share and penetration by further expanding its distribution capabilities and by cross-selling products and services;

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capitalize on its expertise in wireless data technology, applications, marketing and operations to drive development of advanced wireless data applications for use over multiple communications devices and networks;

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capture economies through national scale and scope, and further realizing the significant revenue and cost synergies offered by the formation of Cingular; and

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maximize the digital capability and capacity of its wireless networks by transitioning to a 3G wireless communications standard.

COMPETITION

Cingular faces substantial competition in all aspects of its business. There is substantial and increasing competition in all aspects of the wireless communications industry. Cingular competes for customers based principally on service offerings, price, call quality, coverage area and customer service. Cingular's competitors are principally large providers of cellular, PCS and other wireless communications services, but Cingular also competes with smaller companies, as well as dispatch mobile telephone companies, resellers and wireline telephone service providers. Some of Cingular's competitors may have greater financial, technical, marketing, distribution and other resources than Cingular does. In addition, some of the indirect retailers who sell Cingular's services also sell its competitors' services. Moreover, Cingular may experience significant competition from companies that provide similar services using other communications

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technologies and services. While some of these technologies and services are now operational, others are being developed or may be developed in the future.

Cingular's ability to compete successfully will depend in part on its marketing efforts and on its ability to anticipate and respond to various competitive factors affecting the industry, including new services and technologies, changes in consumer preferences, demographic trends, economic conditions and pricing strategies of competitors. As a result of competition, Cingular may be required to reduce its service prices, restructure service packages to provide more services without increasing prices, and increase its advertising and promotional spending to respond to competition. As a result, its revenues, margins, average revenue per subscriber and cost per gross subscriber addition could be negatively impacted.

The wireless communications industry has been experiencing significant consolidation and alliances, and this trend is expected to continue. This trend may create additional large, well-capitalized competitors with substantial financial, technical, marketing, distribution and other resources to compete with Cingular's product and service offerings. Competitors with more complete nationwide footprints may be able to offer nationwide services and plans more economically due to less dependence on roaming arrangements. In addition, alliances such as that between AT&T Wireless and NTT DoCoMo Inc. of Japan, and mergers and acquisitions, such as the pending acquisition of VoiceStream Wireless by Deutsche Telekom, will give domestic competitors better access to international technologies, marketing expertise and strategies, cost synergies and sources of capital.

Under the current rules of the FCC, six or more PCS licensees, two cellular licensees and one or more enhanced specialized mobile radio licensees may operate in each geographic area. This structure has resulted in the presence of multiple competitors in Cingular's markets and makes it challenging for Cingular to attract new customers and retain existing ones. Cingular experiences robust competition in its major operating markets. Proposed or future rules and spectrum allocations or re-allocations may increase the number of wireless licensees in an area. Competition also may increase to the extent that smaller, stand-alone wireless providers transfer licenses to larger, better capitalized and more experienced wireless providers.

NETWORK

Licenses

Cingular has licenses to provide cellular and PCS wireless services on the 800 MHz and 1900 MHz portions of the radio spectrum in areas that cover approximately 70% of the U.S. population. Cingular's licenses in the 800 MHz band enable it to provide both analog and digital cellular services, while its 1900 MHz licenses are all digital. Cingular also has 900 MHz licenses to provide data-only services in certain areas. Cingular obtained its domestic spectrum assets through application lotteries, mergers, acquisitions, exchanges, FCC auctions and uncontested application grants of cellular licenses.

Coverage

Cingular has a wireless voice presence in 43 of the 50 top wireless markets across the country. Cingular has also signed numerous roaming agreements to ensure its customers can receive wireless service in virtually all areas in the United States where broadband wireless service is available. Moreover, as of year-end 2000, the Cingular Interactive business unit served 570,000 subscribers on its Mobitex network that covered a population of approximately 184 million in major U.S. cities, including all of the 50 largest metropolitan areas. Cingular's cellular and PCS networks are substantially built-out, except for certain PCS licenses in the states of Washington and Pennsylvania.

Technology

Cingular offers analog and digital service in most of its cellular markets and digital service in its 1900 MHz markets. Digital technology offers many advantages over analog technology, including substantially increased network capacity, lower operating costs per unit, reduced susceptibility to fraud and the opportunity to provide improved data transmissions. Digital service also provides other benefits, including extended battery life, improved voice quality, greater call security, lower per-minute costs, as well as enhanced features and services such as short alphanumeric message service. At present, Cingular's cellular and PCS networks provide digital coverage to 90% of its network.

Cingular uses TDMA in its cellular and contiguous PCS markets and GSM in its other PCS markets. Both TDMA and GSM allow for several features and services, such as extended battery life, improved voice quality, greater call security and lower per-minute costs, as well as enhanced features and services. Additionally, new technologies are currently being developed that should enable TDMA and GSM platforms to be interoperable for voice and data services. Furthermore, UMTS, an

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advanced 3G technology expected to offer the highest transmission rates and capacity utilization of any wireless technologies under development, is the 3G technology that is expected to ultimately be offered by providers using the TDMA and GSM technology platforms. As a result, TDMA and GSM may offer excellent platforms from which to migrate Cingular's existing network to 3G technology.

Cingular's 900 MHz interactive paging service utilizes the Mobitex network, a leading packet-switched radio cellular network operating at around 8,000 bytes per second. Cingular currently has over 2,000 base stations deployed nationwide and plans to increase that number to 2,300 in 2001. Cingular is the only Mobitex operator in the United States, though Mobitex networks exist in other countries including Australia, Belgium, Korea, the Netherlands, Sweden and the United Kingdom. Mobitex is a dedicated packet-switched network, which allows users to access the network almost instantly and also allows customers to pay based on volume transmitted instead of connection time. Mobitex is also an open international standard, which permits the creation of off-the-shelf applications by independent application developers.

REGULATORY ENVIRONMENT

The FCC regulates the licensing, construction, operation, acquisition and transfer of wireless systems in the United States pursuant to the Communications Act of 1934 and its associated rules, regulations and policies.

To obtain the authority to have the exclusive use of radio frequency spectrum in an area within the United States, wireless communications systems must be licensed by the FCC to operate the wireless network and mobile devices in assigned spectrum segments and must comply with the rules and policies governing the use of the spectrum as adopted by the FCC. These rules and policies, among other things, (1) regulate Cingular's ability to acquire and hold radio spectrum licenses; (2) impose technical obligations on the operation of Cingular's network; (3) impose requirements on the ways Cingular provides service to and communicates with its customers; (4) regulate the interconnection of its network with the networks of other carriers; (5) obligate Cingular to permit unrestricted resale of its services by resellers and to serve roaming customers of other wireless carriers; and (6) impose a variety of fees and charges on its business that are used to finance numerous regulatory programs and part of the FCC's budget.

Licenses are issued for only a fixed period of time, typically 10 years. Consequently, Cingular must periodically seek renewal of those licenses. The FCC will award a renewal expectancy to a wireless licensee that has provided substantial service during its past license term and has substantially complied with applicable FCC rules and policies and the Telecommunications Act of 1996. Licenses may be revoked for cause and license renewal applications denied if the FCC determines that a renewal would not serve the public interest. Violations of FCC rules may also result in monetary penalties or other sanctions. FCC rules provide that competing renewal applications for licenses will be considered in comparative hearings, and establish the qualifications for competing applications and the standards to be applied in hearings.

Wireless systems are subject to Federal Aviation Administration and FCC regulations governing the location, lighting and construction of transmitter towers and antennas and are subject to regulation under federal environmental laws and the FCC's environmental regulations, including limits on radio frequency radiation from mobile handsets and towers. State or local zoning and land use regulations, including compliance with state and local historic preservation requirements, also apply to tower siting and construction activities.

The Telecommunications Act of 1996 and the FCC rules require the FCC's prior approval of the assignment or transfer of control of a license for a wireless system. Non-controlling minority interests in an entity that holds an FCC license generally may be bought or sold without FCC approval, subject to the FCC's spectrum aggregation limits. However, notification and expiration or earlier termination of the applicable waiting period under Section 7A of the Clayton Act by either the Federal Trade Commission or the Department of Justice may be required, as well as approval by, or notification of, state or local regulatory authorities having competent jurisdiction, if Cingular sells or acquires wireless systems.

Cingular believes that it is in compliance in all material respects with license terms and rules and regulations and any orders of the FCC applicable to it.

RECENT DEVELOPMENTS

On January 29, 2001, the FCC announced the conclusion of the bidding phase of its re-auction of licenses in the 1900 MHz band, which is used to provide PCS wireless services. Although Cingular did not participate in the auction, Cingular has a non-controlling equity interest in Salmon PCS LLC (Salmon), a limited liability company, which did participate in the FCC auction. Of the 422 licenses offered, Salmon was announced the winning bidder of 79 licenses spread across approximately 77 markets in

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the United States, including Los Angeles, Boston, Washington, D.C., Houston, Dallas, Minneapolis and Atlanta. These 79 licenses cover more than 77.1 million POPs and will cost approximately $2.3 billion if the FCC grants Salmon the licenses. Challenges to the auction rules, proceedings or Salmon's structure may delay the award of the licenses, disqualify Salmon from receiving all the licenses it won or require that it pay more for its licenses. Cingular has an 85% economic interest in Salmon and provided Salmon with a secured loan that it used to make the $470 million down payment for the licenses, which represents 20% of its winning bid. In addition, Cingular is committed, upon request by Salmon's CEO, to providing to Salmon through additional secured loans, substantially all of the capital required to pay the balance due on the licenses, to build-out its systems and to fund any operating losses. Salmon has the right, subject to the control of Salmon's CEO, to market its services under the Cingular brand name and to hire Cingular to manage its network.

In November 2000, Cingular reached an agreement with VoiceStream Wireless on an exchange of licenses, whereby each company will exchange FCC licenses covering approximately 35 million people. Cingular will obtain access to 10 MHz of spectrum for the New York major trading area, as well as 10 MHz of spectrum in each of the St. Louis and Detroit basic trading areas. The New York major trading area covers all five boroughs of New York City, all of Long Island as well as parts of upstate New York, northeast Pennsylvania, New Jersey and parts of Connecticut. In exchange, Cingular will transfer to VoiceStream Wireless licenses covering 10 MHz of spectrum out of the 30 MHz of spectrum Cingular has in the Los Angeles and San Francisco major trading areas, which include the entire states of California and Nevada. As a result of the spectrum exchange, Cingular will gain access to 19 million potential customers in the New York metropolitan area and increase its licensed POPs from 190 million to approximately 210 million. The exchange is subject to various closing conditions, including regulatory approval. While there can be no assurances, Cingular expects the transaction to close in mid-2001.

INTERNATIONAL OPERATIONS

Our international operations consist primarily of wireless service providers operating in 15 countries in Latin America, Asia and Europe. We do not own 100% of each of these companies; adjusting market and customer data to reflect this partial ownership, our licensed service areas had a population of approximately 181 million and provided wireless services to approximately 9.3 million customers, each as of November 30, 2000.

The table below sets forth a summary overview of our international operating companies as of November 30, 2000. Our international investments include the following:

Country			BellSouth Ownership in Operating Company	Total Population Served	Total Customers Served
				(in millions)	(in thousands)
Argentina			65.0	35.8	1,606
Brazil
	Sao Paulo region		44.5	18.1	1,559
	Northeast region		46.8	26.6	757
	TCO		17.3	28.1	1,393
Chile			100.0	15.1	691
Colombia			66.0	41.6	859
Ecuador			89.4	12.4	225
Guatemala			60.0	11.9	13
Nicaragua			89.0	2.9	90
Panama			43.7	2.8	206
Peru			96.8	25.2	361
Uruguay			46.0	2.1	127
Venezuela			78.2	23.2	3,235
		Subtotal Latin America		245.8	11,122
Denmark			46.5	5.3	810
Germany			22.5	82.5	6,068
India			24.5	5.5	37
Israel			34.8	6.1	1,857
		Subtotal Europe and Asia/Pacific		99.4	8,772
Total International				345.2	19,894

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OVERVIEW OF OPERATIONS

Latin America

We own all or a substantial interest in each of our Latin American companies. Our largest operations by revenue are in Venezuela, Brazil and Argentina. We also have operations in Chile, Ecuador, Nicaragua, Panama, Peru, Uruguay, and we commenced operations in Guatemala in 2000. In addition, in 2000 we acquired a controlling interest in a wireless operator in Colombia, which in turn acquired another Colombian wireless provider, giving us a national presence in Colombia.

We typically play a lead role in the management and direction of our Latin American companies. In some cases, the ownership structure of these companies reflects government requirements that local owners hold an interest in the companies' telecommunications licenses. When entering new markets in Latin America, we typically seek to build strong relationships with one or more local partners who are more familiar with the country's business and political environment.

In structuring our investments, we exercise operating influence through board representation, the right to appoint certain key members of management and consent rights with respect to significant matters, including amounts of capital contributions. In addition, we try to assure our ability to maintain a position of influence in the venture, if not outright control, by obtaining rights of first refusal on future sales of our partners' interests and on equity issuances by the venture. We also generally secure audit rights and audits are periodically performed by our internal audit groups. As our investments become profitable and mature, we may buy out local partners who wish to sell, increasing our ownership stake and influence in those companies. The particular governance rights vary from venture to venture, and often are dependent upon the size of our investment relative to that of other investors. Under the governing documents for some of these ventures, certain key matters such as the approval of business plans and decisions as to the timing and amount of cash distributions require the consent of our partners. We will likely enter into similar arrangements to pursue additional opportunities in Latin America.

Europe and Asia

We own interests in joint ventures that are structured in a manner similar to our Latin American investments and provide wireless communications in Denmark, Germany, Israel and India.

E-Plus restructuring

In February 2000, we closed on a previously announced alliance with KPN Royal Dutch Telecom. We utilized our right of first refusal which enabled KPN to acquire a 77.5 percent interest in E-Plus and allows us the option after 18 months of converting our 22.5 percent interest in E-Plus into either 200 million shares of KPN or shares representing at the time an estimated 33.3 percent ownership interest in KPN's wireless subsidiary.

As part of this transaction, we also agreed to make up to $3 billion of loans available to KPN to be used for further wireless investments in Europe and received non-detachable warrants to purchase approximately 90 million additional shares of KPN. Our commitment to lend expires and all loans made under the commitment must be repaid on March 1, 2004. We loaned approximately $443 to KPN during 2000, reducing our commitment to lend to KPN to $2.56 billion. KPN applied the proceeds towards the purchase of new third generation wireless licenses from the German government for use by our German operations. We also guaranteed $1.35 billion in bank loans to our German operations, the proceeds of which were also applied towards the purchase of the new licenses, bringing the bank loans to our German operations that we have guaranteed to $1.827 billion. In December 2000, KPN agreed not to make any further draws against our lending commitment prior to January 2003 unless the draws are used to repay loans we have made to KPN or to our German operations, or unless all such loans have already been repaid. The loan to KPN is included in Investments and Advances in our consolidated balance sheet at December 31, 2000.

BUSINESS STRATEGY

We have two basic goals for our international operations:

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Become the leading wireless communications provider in Latin America by expanding and diversifying our existing operations into new communications services and investing in new businesses with significant potential for market growth, and

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Maximize the value of our investments in existing operations in Europe and Asia.

To achieve our goals, we expect to build on our competitive strengths and market position in wireless telecommunications by pursuing the following strategies:

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Continue to grow rapidly all existing wireless operations using our established brands and

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reputation for quality to benefit from expected subscriber growth;

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Expand pan-regional coverage in Latin America by selectively bidding for new licenses and pursuing targeted acquisitions of existing service providers, both in countries in which we currently operate and in new countries, capitalizing, where possible, on in-country expansion opportunities to give our operations a nationwide presence;

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Broaden the existing capabilities and service offerings of our operations:

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through expanding into new wireless services by enhancing our existing networks, such as pursuing "last mile" technologies to augment access to our customers. This includes using fixed wireless technologies such as wireless local loop. For example, in 2000 in Venezuela we won wireless local loop licenses covering substantially all the country which will enable us to offer fixed local and Internet services, and in Argentina we expanded into long distance and data services; and

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through expansion of our networks through interconnection agreements between our operations in Latin America and to North America and Europe.

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Realize increased operating efficiencies among our existing operations to leverage the collective purchasing power of our companies; share information, ideas and experiences among the companies through a best practices program.

TECHNOLOGY

All of our international cellular markets utilize digital technology. We have always selected the type of digital technology for each international market offering the best cost, quality and capacity available at the time in that part of the world. TDMA technology was chosen for Brazil, Chile, Ecuador, Israel, Nicaragua, Panama and Peru. GSM was specified as the digital technology for Denmark, Germany and India by the national telecommunications ministries in those countries. More recently, we chose Code Division Multiple Access (CDMA) to upgrade the networks in Argentina, Uruguay and Venezuela and to launch service in Guatemala, based on improvements in cost quality and capacity as that technology has matured. We also believe there is potentially significant value in high-speed mobile data and Internet services in international markets, particularly in Latin America. We are currently evaluating the proposed 3G technologies and the market potential of services based on these technologies.

COMPETITION

Our international wireless operations are subject to significant competition, generally from at least one other wireless provider and, increasingly, from multiple new PCS providers and any number of resellers. These competing service providers generally have partners who are at least as well capitalized as we are. In some cases, the government-owned telephone companies operate incumbent wireline and wireless systems or have a substantial investment in a competing wireless provider. In all cases, the competing wireless providers generally have access to substantial financial resources. Many governments have privatized the government-owned telephone companies, and these privatized companies often become more formidable competitors due to the availability of additional capital and technical expertise. We anticipate an increasing number of competitors in our wireless service markets.

LICENSES AND REGULATION

Our ability to introduce new products and services depends to a large extent upon whether the new products and services are permitted by the local laws and regulatory authorities. As countries have encouraged foreign investment in telecommunications and have privatized their government-owned wireless telephone companies, the general trend has been toward increasing deregulation of telecommunications. In several of our markets, our joint ventures offer or plan to offer international long distance services either to their wireless subscriber bases or, in some cases, to the entire population. In addition, we offer domestic long distance service in certain markets through our nationwide wireless facilities.

These international wireless operations are provided pursuant to the terms of licenses granted by the telecommunications agency or similar supervisory authority in the various countries. Such agencies typically also promulgate and enforce regulations regarding the construction and operation of network equipment. Our international operations also typically require government permits, including permits from local building and planning commissions for the construction and operation of cell sites. Some of our international operations have not been able to obtain all required permits. Although we do not believe such non-compliance will have a material effect on our business as a whole, we cannot assure you that there will not be claims or regulatory actions relating to noncompliance with these permitting requirements. Other regulations commonly encountered in

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international markets include legal restrictions on the percentage ownership of telecommunications licensees by foreign entities, such as us, and transfer restrictions or government approval requirements regarding changes in the ownership of licensees.

The terms of the licenses granted to our international ventures and conditions of the license renewal vary from country to country. Although license renewal is not usually guaranteed, most licenses do address the renewal process and terms, which we believe we will be able to satisfy. As licenses approach the end of their terms, it is our intention to pursue renewal as provided by these license agreements.

As a U.S. company, we are subject to the Foreign Corrupt Practices Act, which generally prohibits U.S. companies from making, directly or indirectly, improper payments to foreign officials for the purpose of obtaining or keeping business, and requires U.S. companies and their subsidiaries to maintain accurate records and adequate accounting controls. Our policy is to comply fully with the Act, and we maintain policies, programs and procedures for compliance with the Act on the part of our employees, agents, partners and other persons whose actions could expose us to liability under the Act. Matters relating to the Act, including those disclosed under Legal Proceedings, may come to the attention of local authorities, media and others and may result in adverse local country impacts, including penalties and other serious injury to our local businesses.

FOREIGN RISKS

Our reporting currency is the U.S. Dollar. However, most of our revenues are generated in the currencies of the countries in which we operate. In addition, many of our operations and equity investees have issued U.S. Dollar-denominated short and long-term debt. The currencies of many Latin American countries have experienced substantial volatility and depreciation in the past. Declines in the value of the local currencies in which we are paid relative to the U.S. Dollar will cause revenues to decrease and dollar-denominated liabilities to increase in local-currency terms.

The impact of a devaluation or depreciating currency on an entity depends on the effect of the devaluation or depreciation on the local economy and the ability of an entity to raise prices and/or reduce expenses. Our ability to raise prices is limited in many instances by government regulation of tariff rates. Due to our constantly changing currency exposure and the potential substantial volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations on our business.

Economic, social and political conditions in Latin America are volatile, which may impair our operations. This volatility could make it difficult for us to continue development of our business, generate revenues or achieve or sustain profitability. Historically, volatility has been primarily caused by: mismanagement of monetary, exchange rate and/or fiscal policies; significant governmental influence over many aspects of local economies; political and economic instability; unexpected changes in regulatory requirements; social unrest or violence; slow or negative economic growth; imposition of trade barriers; price inflation in local currencies; wage and price controls; and economic instability in countries outside of Latin America. Poor social, political and economic conditions may inhibit use of our services which may adversely impact our business.

PROPOSED TRACKING STOCK

In December 2000, our shareholders approved amendments to our charter that will permit us to issue our common stock in series. We plan a public offering of shares of Latin America group stock to finance our expansion in Latin America. When we issue shares of Latin America group stock to the public, our Board of Directors will initially designate two series: Latin America group stock, intended to reflect the separate performance of our Latin American businesses, and BLS group stock, intended to reflect the separate performance of all of our other businesses. At that time, each existing share of our common stock will be changed into one share of BLS group stock.

At the time of a public offering, a number of shares of Latin America group stock will be reserved for the BLS group or for issuance to the holders of BLS group stock. We expect that we would distribute, as a dividend to the holders of BLS group stock, the reserved shares of Latin America group stock within six to 12 months following the public offering.

Our plans to create, issue and distribute Latin America group stock are subject to a number of factors, including market conditions and other factors. The implementation and timing of these transactions are uncertain.

19

ADVERTISING AND PUBLISHING

BUSINESS OPERATIONS

We own a group of companies that publish, print, sell advertising in and perform related services concerning alphabetical and classified telephone directories in both paper and electronic formats. Advertising and publishing revenues are derived primarily from sales of directory advertising, which represented approximately 8% of our total operating revenues in 1998, 1999 and 2000.

We are one of the leading publishers of telephone directories in the United States. We publish alphabetical white page directories of business and residential telephone subscribers in substantially all of our wireline telecommunications markets and sell advertising in and publish classified directories under The Real Yellow Pages trademark in the same markets.

We also act as a sales agent for advertising in yellow page directories in certain states and for nonaffiliated telephone companies and receive a portion of the advertising revenue as a commission. During 2000, we contracted with 110 nonaffiliated telephone companies to sell advertising in over 350 classified directories in 43 states. We also act as an agent for national yellow page ad placements in all 50 states and Canada on behalf of over 600 companies.

In addition to publishing directories in traditional paper form, we publish white and yellow page directories in other media. For example, we offer white page directories on CD-ROM for most of our major markets, publish Internet white and yellow page directories for the southeastern U.S. and offer additional Internet advertising services. These services link to and are available on similar on-line directories with information for businesses nationwide. We also sell additional advertising to local and national businesses for our on-line yellow pages.

We continually seek to expand our advertising and publishing business by increasing advertising sales in our traditional directory products. We also market to organizations and companies with unique directory needs. Export directories, audio text advertising, restaurant and entertainment guides and Internet directories are examples of such directory services and products.

We own a printing company which prints substantially all white and yellow pages and specialty directories distributed within our wireline telecommunications markets. In 2000, it printed over 67 million white page, yellow page and specialty directories. This company also prints other materials for us and our affiliates and, to a limited extent, documents for nonaffiliated companies.

We own interests in companies that publish directories and offer electronic advertising services in Peru and Brazil and we provide directory publishing consulting services internationally. As we seek further business opportunities overseas, we may consider other investments in international directory companies to complement our telecommunications service offerings there.

COMPETITION

Competition for advertising revenues continues to intensify. Many different media compete for advertising revenues, and some newspaper organizations and other companies have begun publishing their own directories. Competition for directory sales agency contracts for the sale of advertising in publications of nonaffiliated companies also continues to be strong. Competitors offer directory listings in various media such as CD-ROM, the Internet and other electronic databases. As such offerings expand and are enhanced through interactivity and other features, we will experience heightened competition in our directory advertising and publishing businesses. We have responded to the increasing competition and changing market environment with new directory products, product enhancements, multi-media delivery options, including Internet directory services, pricing changes and local promotions.

ALL OTHER BUSINESSES

WIRELESS DATA

In October 2000, we contributed our wireless data operations to Cingular. For a discussion of this business, see the "Data" discussion in our Domestic Wireless segment.

ENTERTAINMENT

We have subsidiaries and joint ventures that develop, implement and manage video systems in several areas within our region. These systems include wireline and wireless based systems designed to compete with cable operators market by market. We currently operate

20

100% digital wireless video systems covering more than one million homes in Atlanta, New Orleans, Jacksonville, Daytona Beach and Orlando. In addition, we operate wired systems in several local communities near Atlanta, Birmingham, Miami and Jacksonville.

In October 2000, we announced that we would restructure our wireless video businesses to focus our entertainment business on our fiber-optic based wireline video operation. This move was made to better align resources with our strategic priorities in broadband services, wireless and international operations. Our broadband business priorities include the accelerated rollout of ADSL, e-center services, Web hosting, and Internet platform (IP) services applications. We began the restructuring activities in December 2000, and recognized total after-tax charges of $323 at that time. We expect to record additional expense during 2001 as the wireless video operations undergo transition.

RESEARCH AND DEVELOPMENT

We conduct research and development activities internally and through external vendors, primarily Telcordia Technologies. Telcordia provides research and development and other services to us and other telecommunications companies. We have contracted with Telcordia for ongoing support of engineering and systems. In addition, we are a member of the National Telecommunications Alliance, an organization which supports our commitment to national security and emergency preparedness.

EMPLOYEES

At December 31, 2000, we employed approximately 103,900 individuals. Of this total, approximately 68,600 were employees engaged in our wireline operations. About 51% of our employees at December 31, 2000 were represented by the Communications Workers of America (the CWA), which is affiliated with the AFL-CIO. Our collective bargaining agreements with the CWA are scheduled to expire on August 4, 2001. Negotiations with the CWA over the terms of new agreements are expected to begin in early June 2001. The outcome of these negotiations cannot be determined at this time.

In February 2000, we announced that we would reduce our domestic general and administrative staff by approximately 2,100 positions. These reductions are the result of the streamlining of work processes in conjunction with our shift to a more simplified management structure. As a result of these reductions, we recorded a one-time charge of $78, or $48 after tax, for severance and post-employment health benefits. We expect to complete these reductions during first quarter 2001.

21

PROPERTIES

GENERAL

Our properties do not lend themselves to description by character or location of principal units. Our investment in property, plant and equipment in our consolidated operations consisted of the following at December 31:

	1999	2000
Outside plant	38%	40%
Central office equipment	35	38
Operating and other equipment	12	9
Land and buildings	8	7
Furniture and fixtures	5	4
Plant under construction	2	2
	100%	100%

These properties are divided among our operating segments as follows: wireline communications, 92%; international operations, 6%; advertising and publishing, 1%; and all other businesses, 1%.

Outside plant consists of connecting lines (aerial, underground and buried cable) not on customers' premises, the majority of which is on or under public roads, highways or streets, while the remainder is on or under private property. We currently self-insure all of our outside plant against casualty losses. Central office equipment substantially consists of digital electronic switching equipment and circuit equipment. Land and buildings consist principally of central offices. Operating and other equipment consists of wireless network equipment, embedded intrasystem wiring (substantially all of which is on the premises of customers), motor vehicles and other equipment. Central office equipment, buildings, furniture and fixtures and certain operating and other equipment are insured under a blanket property insurance program. This program provides substantial limits of coverage against "all risks" of loss including fire, windstorm, flood, earthquake and other perils not specifically excluded by the terms of the policies.

Substantially all of the installations of central office equipment for the wireline communications business are located in buildings and on land owned by BST. Many garages, administrative and business offices and telephone service centers are in leased quarters. Most of the land and buildings associated with our nonwireline businesses and administrative functions are leased.

CAPITAL EXPENDITURES

Capital expenditures consist primarily of (a) gross additions to property, plant and equipment having an estimated service life of one year or more, plus the incidental costs of preparing the asset for its intended use, and (b) gross additions to capitalized software.

The total investment in property, plant and equipment has increased from $44.2 billion at January 1, 1995 to $60.9 billion at December 31, 2000, not including deductions for accumulated depreciation. Significant additions to property, plant and equipment will be required to meet the growing demand for telecommunications services and to continually modernize and improve such services to meet competitive demands. We project continued population and economic expansion in certain growth centers within our nine-state area during the next five to ten years. In addition, growth in international markets will require investment to expand existing wireless networks.

Our capital expenditures for 1996 through 2000 were as follows:

	Millions
1996	$	4,455
1997	$	4,858
1998	$	5,212
1999	$	6,200
2000	$	6,995

We project capital expenditures of approximately $5.5 to $6.0 billion for 2001, not including Cingular. A majority of the expenditures will be to expand, enhance and modernize current wireline operating systems, and to develop international wireless and other businesses.

During 2000, we funded our normal business operations substantially through internal sources and, to the extent necessary, from external financing sources. We expect expenditures for 2001 to be financed in the same manner.

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LEGAL PROCEEDINGS

Reciprocal compensation

Following the enactment of the Telecommunications Act of 1996, our telephone company subsidiary, BST, and various competitive local exchange carriers entered into interconnection agreements providing for, among other things, the payment of reciprocal compensation for local calls initiated by the customers of one carrier that are completed on the network of the other carrier. Numerous competitive local carriers have claimed entitlement from BST for compensation associated with dial-up calls originating on BST's network and connecting with Internet service providers served by the competitive local carriers' networks. BST has maintained that dial-up calls to Internet service providers are not local calls for which terminating compensation is due under the interconnection agreements; however, the courts and state regulatory commissions in BST's operating territory that have considered the matter have, in most cases, ruled that BST is responsible for paying reciprocal compensation on these calls. At December 31, 2000, the exposure related to unrecorded amounts withheld from competitive local carriers was approximately $320, including accrued interest. We have commenced discussions with several competitive local carriers concerning settlement of some claims, and agreements have been reached in certain circumstances.

Other reciprocal compensation issues

In a related matter, a competitive local carrier was claiming terminating compensation of approximately $165 for service arrangements that we did not believe involved "traffic" under our interconnection agreements. We filed a complaint with the state regulatory commission asking that agency to declare that we did not owe reciprocal compensation for these arrangements. In March 2000, the state commission ruled in our favor finding that compensation was not owed to the competitive local carrier. This matter is currently on appeal.

U.S. Electronics

In October 1999, two of the Company's wholly-owned subsidiaries, BellSouth Products, Inc. (BSP) and BST filed a complaint against U.S. Electronics, Inc. (USE), in the United States District Court for the Northern District of Georgia. The complaint alleged that USE, a distributor of residential telephone equipment, breached its distributorship contract with BSP and violated the Robinson-Patman Act. USE denied the material allegations of the complaint and filed counterclaims against the Company, BSP, BST, and several other BellSouth entities, alleging that the BellSouth companies were in breach of the distributorship contract. In January 2001, BellSouth settled the litigation and paid $200 million to USE for the termination of their then-existing agreement. BellSouth has entered into a new agreement with USE.

Foreign Corrupt Practices Act

In July 2000, the SEC began a formal investigation of whether we and others may have violated the Foreign Corrupt Practices Act (FCPA). The SEC has subpoenaed documents relating to the activities of our foreign subsidiaries, and we have produced responsive documents. Prior to the commencement of the SEC's formal investigation, we had engaged outside counsel to investigate an FCPA matter relating to the activities of one of our foreign subsidiaries in Latin America, and outside counsel concluded that those activities did not violate the Act. Thereafter and independent of these developments, our internal auditors, in the ordinary course of conducting compliance reviews, identified issues concerning accounting entries made by another of our Latin American subsidiaries. Our internal investigation of this matter is continuing. We have informed the SEC as to this matter, and the SEC has expanded its investigation to encompass it. We are cooperating with the SEC in its investigation, but we cannot predict the duration or the outcome of the SEC's investigation or whether the scope of the investigation will be expanded beyond the matters currently identified.

Environmental Matters

We are subject to a number of environmental matters as a result of our operations and the shared liability provisions related to the break-up of the Bell System. As a result, we expect that we will be required to expend funds to remedy certain facilities, including those Superfund sites for which we have been named as a potentially responsible party, for the remediation of sites with underground fuel storage tanks and other expenses associated with environmental compliance. At December 31, 2000, our recorded liability, related primarily to remediation of these sites, was approximately $22.

We monitor our operations with respect to potential environmental issues, including changes in legally mandated standards and remediation technologies. Our recorded liability reflects those specific issues where remediation activities are currently deemed to be probable and where the cost of remediation is estimable. We continue to believe that expenditures in connection with additional remedial actions under the current environmental protection laws or related matters would not be material to our results of operations, financial position or cash flows.

23

Other Matters

We are also subject to claims arising in the ordinary course of business involving allegations of personal injury, breach of contract, anti-competitive conduct, employment law issues, regulatory matters and other actions. While complete assurance cannot be given as to the outcome of any legal claims, we believe that any financial impact would not be material to our results of operations, financial position or cash flows. See note M to our consolidated financial statements.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

On December 5, 2000 we held a special meeting of shareholders. At the meeting, three proposals were submitted to a vote of the shareholders, with 73.8% of all outstanding shares of BellSouth common stock being represented. All three proposals were passed. The specific results of each vote are listed below:

Proposal #1—To adopt articles of amendment to our charter to:

•

permit us to issue a total of 8.65 billion shares of BellSouth common stock in series, of which our board of directors currently expects initially to designate 6.4 billion shares as BLS group stock and 2.25 billion shares as Latin America group stock; and

•

provide for each outstanding share of our existing common stock to be changed into one share of BLS group stock immediately before the initial issuance of Latin America group stock.

	FOR	AGAINST	ABSTAIN
Proposal #1	1,266,620,905	116,344,868	20,500,879
% of the O/S	66.58%	6.12%	1.08%
% of the voted	90.25%	8.29%	1.46%

Proposal #2—To adopt the Amended and Restated BellSouth Corporation Stock Plan to:

•

reflect the tracking stock proposal by authorizing grants of awards with respect to BLS group stock and Latin America group stock and


•

to increase the annual grant limits above current plan limits.

	FOR	AGAINST	ABSTAIN
Proposal #2	1,199,897,896	180,931,085	22,637,671
% of the O/S	63.08%	9.51%	1.19%
% of the voted	85.50%	12.89%	1.61%

Proposal #3—To adopt amendments to our by-laws to change the quorum and reduce the votes required to approve proposals at shareholders' meetings.

	FOR	AGAINST	ABSTAIN
Proposal #3	1,254,727,604	124,102,989	24,636,059
% of the O/S	65.96%	6.52%	1.30%
% of the voted	89.40%	8.84%	1.76%

24

ADDITIONAL INFORMATION—DESCRIPTION OF BELLSOUTH STOCK

GENERAL

Our Articles of Incorporation authorize the issuance of 8,650,000,000 shares of common stock, par value $1 per share, and 100,000,000 shares of cumulative, first preferred stock, par value $1 per share. Our Board of Directors is authorized to create from the unissued common stock one or more series, and, prior to the issuance of any shares in any particular series, to fix the voting powers, preferences, designations, rights, qualifications, limitations or restrictions of such series. The Board has not created any series of common stock. The Board is also authorized to provide for the issuance, from time to time, of the first preferred stock in series and, as to each series, to fix the number of shares in such series and the voting, dividend, redemption, liquidation, retirement and conversion provisions applicable to the shares of such series. No shares of first preferred stock are outstanding. The Board has created Series B First Preferred Stock consisting of 30 million shares, the Series B Preferred Stock, for possible issuance under the BellSouth Shareholder Rights Plan. The Series A First Preferred Stock was created for a previous shareholder rights plan which has expired. See Preferred Stock Purchase Rights and Market for Registrant's Common Equity and Related Stockholder Matters.

DIVIDEND RIGHTS

The holders of common stock are entitled to receive, from funds legally available for the payment thereof, dividends when and as declared by resolution of the Board. While any series of preferred stock is outstanding, no dividends, other than dividends payable solely in common stock, may be declared or paid on common stock, and no common stock may be purchased, redeemed or otherwise acquired for value, (a) unless dividends on all outstanding shares of preferred stock for the current and all past dividend periods have been paid or declared and provision made for payment thereof and (b) unless all requirements with respect to any purchase, retirement or sinking fund or funds applicable to all outstanding series of preferred stock have been satisfied.

VOTING RIGHTS

Except in connection with the "business combinations" and "fair price" provisions discussed below, holders of shares of common stock are entitled to one vote, in person or by proxy, for each share held on the applicable record date with respect to each matter submitted to a vote at a meeting of shareholders, but such holders do not have cumulative voting rights. The holders of any series of preferred stock, when issued, may receive the right to vote as a class on certain amendments to the Articles of Incorporation and on certain other matters, including the election of directors in the event of certain defaults, which may include non-payment of preferred stock dividends.

LIQUIDATION RIGHTS

In the event of voluntary or involuntary liquidation of BellSouth, holders of the common stock will be entitled to receive, after creditors have been paid and the holders of the preferred stock, if any, have received their liquidation preferences and accumulated and unpaid dividends, all the remaining assets of BellSouth.

PRE-EMPTIVE RIGHTS; CONVERSION RIGHTS; REDEMPTION

No shareholders of any class shall be entitled to any pre-emptive rights to subscribe for or purchase any shares or other securities issued by BellSouth. The common stock has no conversion rights and is not subject to redemption.

PREFERRED STOCK PURCHASE RIGHTS

Each share of common stock outstanding includes one preferred stock purchase right (Right). Under certain circumstances, each Right will entitle the holder to purchase one one-thousandth of a share of Series B Preferred Stock, $1 par value (Common Equivalent Preferred Stock), which unit is substantially equivalent in voting and dividend rights to one whole share of the common stock, at a price of $200 per unit (the Purchase Price). The Rights are not presently exercisable and may be exercised only if a person or group (Acquiring Person) acquires 10% of the outstanding voting stock of BellSouth without the prior approval of the Board or announces a tender or exchange offer that would result in ownership of 10% or more of the common stock.

If an Acquiring Person becomes such without prior Board approval, the Rights are adjusted, and each holder, other than the Acquiring Person, then has the right to receive, on payment of the Purchase Price, the number of shares of common stock, units of the Common Equivalent Preferred Stock or other assets having a market value equal to twice the Purchase Price.

The Rights currently trade with the common stock and expire in December 2009.

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BUSINESS COMBINATIONS

The Georgia legislature has enacted legislation which generally prohibits a corporation which has adopted a by-law electing to be covered thereby, which BellSouth has done, from engaging in any "business combination", that is a merger, consolidation or other specified corporate transaction, with an "interested shareholder", a 10% shareholder or an affiliate of the corporation which was a 10% shareholder at any time within the preceding two years, for a period of five years from the date such person becomes an interested shareholder, unless the interested shareholder (a) prior to becoming an interested shareholder, obtained the approval of the Board of Directors for either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder, (b) becomes the owner of at least 90% of the outstanding voting stock of the corporation in the same transaction in which the interested shareholder became an interested shareholder, excluding for purposes of determining the number of shares outstanding those shares owned by officers, directors, subsidiaries and certain employee stock plans of the corporation or (c) subsequent to the acquisition of 10% or more of the outstanding voting stock of the corporation, acquires additional shares resulting in ownership of at least 90% of the outstanding voting stock of the corporation and obtains approval of the business combination by the holders of a majority of the shares of voting stock of the corporation, other than those shares held by an interested shareholder, officers, directors, subsidiaries and certain employee stock plans of the corporation. BellSouth's "business combinations" by-law may be repealed only by an affirmative vote of two-thirds of the continuing directors and a majority of the votes entitled to be cast by the shareholders, other than interested shareholders, and shall not be effective until 18 months after such shareholder vote. The Georgia statute provides that a domestic corporation which has thus repealed such a by-law may not thereafter readopt the by-law as provided therein.

FAIR PRICE PROVISIONS

"Fair price" provisions contained in the Articles of Incorporation require, generally, in connection with a merger or similar transaction between BellSouth and an "interested shareholder", the unanimous approval of BellSouth's directors not affiliated with the interested shareholder or the affirmative vote of two-thirds of such directors and a majority of the outstanding shares held by disinterested shareholders, unless (a) within the past three years the shareholder has been an interested shareholder and has not increased its shareholdings by more than one percent in any 12-month period or (b) all shareholders receive at least the same consideration for their shares as the interested shareholder previously paid. Additionally, these provisions may be revised or rescinded only upon the affirmative vote of at least two-thirds of the directors not affiliated with an interested shareholder and a majority of the outstanding shares held by disinterested shareholders.

BOARD CLASSIFICATION; REMOVAL OF DIRECTORS

Board classification provisions adopted by the shareholders and contained in the By-laws prescribe a shareholder vote for approximately one-third of the directors, instead of all directors, at each annual meeting of shareholders for a three-year term. Additionally, such provisions provide that shareholders may remove directors from office only for cause, and can amend the By-laws with respect to the number of directors or amend the board classification provisions only by the affirmative vote of the holders of at least 75% of the outstanding shares entitled to vote for the election of directors.

LIMITATION ON SHAREHOLDERS' PROCEEDINGS

Our By-laws require that notice of shareholder nominations for directors and of other matters to be brought before annual shareholders' meetings must be provided in writing to the Secretary of BellSouth not later than the 75th day nor earlier than the 120th day prior to the date which is the anniversary of the annual meeting of shareholders held in the prior year. Such By-laws also provide that a special shareholders' meeting may be called by shareholders only upon written request signed by the holders of at least three-quarters of the outstanding shares entitled to vote at the meeting.

The provisions discussed under the five preceding sub-headings and the ability to issue first preferred stock, such as the Series B Preferred Stock described above, with characteristics established by the Board and without the consent of the holders of common stock and the ability to issue additional shares of common stock may have the effect of discouraging takeover attempts and may also have the effect of maintaining the position of incumbent management. In addition, these provisions may have a significant effect on the ability of our shareholders to benefit from certain kinds of transactions that may be opposed by the incumbent Board.

26

EXECUTIVE OFFICERS

The executive officers of BellSouth Corporation are listed below:

Name	Age	Office	Officer Since	This Office Since
F. Duane Ackerman	58	Chairman of the Board, President and Chief Executive Officer	1983	1997
Richard A. Anderson	42	President—Customer Markets	1993	2000
Charles B. Coe	53	President—Network Services	1988	2000
Keith O. Cowan	44	Chief Planning and Development Officer	1996	2000
Francis A. Dramis, Jr.	52	Chief Information and E-Commerce Officer	1998	2000
Jere A. Drummond	61	Vice Chairman—External Affairs	1983	2000
Ronald M. Dykes	53	Chief Financial Officer	1988	1995
Gary D. Forsee	57	Vice Chairman and President—BellSouth International	1999	1999
Charles R. Morgan	54	General Counsel	1998	1998
Donald J. Perozzi	63	President—Advertising & Publishing	1987	2000
W. Patrick Shannon	38	Vice President—Finance and Supply Chain Management	1997	1997
Richard D. Sibbernsen	53	Vice President—Human Resources	1997	1997
Carl E. Swearingen	54	Senior Vice President—Corporate Compliance and Corporate Secretary	1989	1998

All of the executive officers of BellSouth, other than Mr. Cowan, Mr. Dramis, Mr. Forsee, Mr. Morgan, Mr. Shannon and Mr. Sibbernsen have for at least the past five years held high level management or executive positions with BellSouth or its subsidiaries. Mr. Cowan was a partner at the law firm of Alston & Bird before joining BellSouth in 1996. Mr. Dramis joined BellSouth in December 1998 from CIO Strategy, Inc., a Clifton, Virginia-based information technology consulting firm. Prior to joining BellSouth in September 1999, Mr. Forsee was President and Chief Executive Officer of Global One, a global telecommunications joint venture, and before that held various positions with Sprint Corporation. Prior to joining BellSouth in February 1998, Mr. Morgan was a partner with Mayer, Brown & Platt, a Chicago-based international law firm, and prior to that was Vice President, General Counsel and Secretary of Chiquita Brands International, Inc. Prior to joining BellSouth in 1997, Mr. Shannon was employed by US West, Inc. as Chief Financial Officer of MediaOne, a company that provides cable television services. In 1997, Mr. Sibbernsen joined BellSouth from TNT Limited, a worldwide transportation company where he was head of corporate human resources and responsible for that company's global human resources strategies and programs.

All officers serve until their successors have been elected and qualified.

27

PART II

MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The principal market for trading in BellSouth common stock is the New York Stock Exchange, Inc. (NYSE). BellSouth common stock is also listed on the Boston, Chicago, Pacific and Philadelphia exchanges in the United States and the London, Frankfurt, Amsterdam and Swiss exchanges. The ticker symbol for BellSouth common stock is BLS. At February 1, 2001, there were 891,893 holders of record of BellSouth common stock. Market price data was obtained from the NYSE Composite Tape, which encompasses trading on the principal United States stock exchanges as well as off-board trading. High and low prices represent the highest and lowest sales prices for the periods indicated.

	Market Prices
			Per Share Dividends Declared
	High	Low
1998
First Quarter	34.22	27.06	$	.18
Second Quarter	34.75	30.50		.18
Third Quarter	39.06	32.16		.18
Fourth Quarter	50.00	36.63		.19
1999
First Quarter	49.94	39.75		.19
Second Quarter	48.75	40.38		.19
Third Quarter	51.31	43.25		.19
Fourth Quarter	48.56	40.88		.19
2000
First Quarter	48.13	34.94		.19
Second Quarter	53.50	41.63		.19
Third Quarter	44.25	35.50		.19
Fourth Quarter	50.63	38.75		.19

STOCK TRANSFER AGENT AND REGISTRAR

Mellon Investor Services, LLC is our stock transfer agent and registrar.

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SELECTED FINANCIAL AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

At December 31 or for the year ended	1996		1997		1998		1999		2000
Income Statement Data:
Operating revenues	$	19,040	$	20,561	$	23,123	$	25,224	$	26,151
Operating expenses		14,261		15,185		17,219		18,787		19,267
Operating income		4,779		5,376		5,904		6,437		6,884
Net income		2,863		3,261		3,527		3,448		4,220
Operating income margin		25.1%		26.1%		25.5%		25.5%		26.3%
Diluted earnings per share of common stock	$	1.44	$	1.64	$	1.78	$	1.80	$	2.23
Diluted weighted-average shares of common stock outstanding (millions)		1,992		1,989		1,984		1,916		1,891
Dividends declared per share of common stock	$	.72	$	.72	$	.73	$	.76	$	.76
Balance Sheet Data:
Total assets		32,568		36,301		39,410		43,453		50,925
Long-term debt		8,116		7,348		8,715		9,113		12,463
Shareholders' equity		13,249		15,165		16,110		14,815		16,912
Other:
Operating cash flow		5,863		7,039		7,741		8,199		8,590

Significant events affecting our historical earnings trends include the following:

•

1996 results include a gain from the sale of a paging business, which increased net income by $344, or $0.17 per share.



•

1997 results include gains resulting from the sales of our interests in Optus Communications, ITT World Directories and Bellcore, which increased net income by $352, or $0.18 per share, $128, or $0.06 per share, and $23, or $0.01 per share. 1997 results also include the effect of a regulatory settlement in South Carolina, which reduced operating revenues by $72 and net income by $47, or $0.02 per share, as well as a loss of $9 incurred in connection with the early redemption of long-term debt.



•

1998 results include gains resulting from the sale of our interests in BellSouth New Zealand and ITT World Directories, and contingent interest and prepayment penalties associated with the repayment of a loan receivable. See notes B and C to the consolidated financial statements and MD&A for further discussion of these items.



•

1999 results include foreign currency losses, losses due to an asset impairment, the recognition of foreign investment tax credits generated in prior years and a gain on the sale of Honolulu Cellular. See notes B, C, D and I to the consolidated financial statements and MD&A for further discussion of these items.



•

2000 results include income related to the restructuring of our ownership interest in German wireless operator E-Plus, expense recorded as a result of a general and administrative staff reduction plan, income generated from the dissolution of the AB Cellular partnership, pension settlement gains, expense resulting from the restructuring of our wireless video entertainment business and expense associated with the termination of a contract. See notes C, D, G and N to the consolidated financial statements and MD&A for further discussion of these items.

29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Consolidated Results of Operations

Key selected financial and operating data for the three years ended December 31, 1998, 1999 and 2000 are as follows. All references to earnings per share are on a diluted basis.

												Percent Change
			1998			1999			2000			1999 vs. 1998		2000 vs. 1999
Results of operations:
Operating revenues			$	23,123		$	25,224		$	26,151		9.1		3.7
Operating expenses				17,219			18,787			19,267		9.1		2.6
Operating income				5,904			6,437			6,884		9.0		6.9
Interest expense				837			1,030			1,328		23.1		28.9
Net earnings (losses) of equity affiliates				92			(169	)		690		N/M	*	N/M
Gain (loss) on sale of operations				335			55			(14	)	N/M		N/M
Other income, net				257			195			366		(24.1	)	87.7
Provision for income taxes				2,224			2,040			2,378		(8.3	)	16.6
		Net income	$	3,527		$	3,448		$	4,220		(2.2	)	22.4
As Reported:
	Net income		$	3,527		$	3,448		$	4,220		(2.2	)	22.4
	Earnings per share		$	1.78		$	1.80		$	2.23		1.1		23.9
Normalized:
	Net income		$	3,259		$	3,825		$	4,155		17.4		8.6
	Earnings per share		$	1.64		$	2.00		$	2.20		22.0		10.0
Cash Flow Data:
Cash provided by operating activities			$	7,741		$	8,199		$	8,590		5.9		4.8
Cash used for investing activities				(5,487	)		(9,888	)		(9,303	)	(80.2	)	5.9
Cash (used for) provided by financing activities				(1,681	)		(167	)		487		N/M		N/M
Other:
Effective tax rate				38.7%			37.2%			36.0%		-150bps		-120bps
Average short-term debt			$	3,239		$	6,182		$	6,987		90.9		13.0
Average long-term debt				8,220			8,599			10,740		4.6		24.9
		Total average debt	$	11,459		$	14,781		$	17,727		29.0		19.9
EBITDA(1)				10,261			11,428			12,425		11.4		8.7
EBITDA margin(2)				44.4%			45.3%			47.5%		+90bps		+220bps

*

Not Meaningful

(1)

EBITDA represents income before net interest expense, income taxes, depreciation and amortization, net earnings (losses) of equity affiliates, severance accrual, provision for restructuring and asset impairments, pension gains and other income, net. We present EBITDA because it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare companies on the basis of operating performance and because we believe that EBITDA is an additional meaningful measure of performance and liquidity. EBITDA does not represent cash flows for the period, nor is it an alternative to operating income (loss) as an indicator of operating performance. You should not consider it in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. The items excluded from the calculation of EBITDA are significant components in understanding and assessing our financial performance. Our computation of EBITDA may not be comparable to the computation of similarly titled measures of other companies. EBITDA does not represent funds available for discretionary uses.

(2)

EBITDA margin is EBITDA divided by operating revenues.

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Overview of consolidated results of operations

On a comparative basis, results reflect revenue growth in the core wireline business, driven by digital and data services revenues, and significant increases in our international customer bases. Expense growth was driven by volume increases at our international businesses and expenses for development and promotion of new business initiatives, including high-speed data and Internet service offerings.

Normalized net income for 1998 excludes the impacts of:

•

A gain from the sale of our 65% interest in BellSouth New Zealand of $110, or $0.06 per share.



•

A gain from the receipt of additional proceeds related to the sale of our investment in ITT World Directories of $96, or $0.05 per share.



•

Contingent interest and prepayment penalties associated with the repayment of a loan, which increased net income by $62, or $0.03 per share.

Normalized net income for 1999 excludes the impacts of:

•

The devaluation of the Brazilian Real. Our share of the foreign currency losses in our Brazilian wireless properties reduced net income by $308, or $0.16 per share. These losses are included in Net earnings (losses) of equity affiliates.



•

An asset impairment loss which reduced net income by $187, or $0.10 per share.



•

The recognition of certain foreign investment tax credits generated in prior years, which increased net income by $95, or $0.05 per share.



•

The gain on sale of our 100% ownership interest in Honolulu Cellular, which increased net income by $23, or $0.01 per share.

Normalized net income for 2000 excludes the impacts of:

•

Income generated from the redemption of AT&T from the AB Cellular Partnership, which increased net income by $292, or $0.15 per share. This income is included in Net earnings (losses) of equity affiliates.



•

Gains generated by the early payout of retirement benefits to employees who separated from BellSouth during 2000. These gains increased net income by $223, or $0.12 per share. These gains are recorded as offsets to Operational and support expenses.



•

Income related to the restructuring of our ownership interest in the German wireless operator, E-Plus, which increased net income by $68, or $0.04 per share. This gain is included in Net earnings (losses) of equity affiliates.



•

Expense recorded as a result of our plan to restructure our wireless video entertainment business, which reduced net income by $323, or $0.17 per share.



•

Expense recorded as a result of our plan to reduce our domestic general and administrative staff, which reduced net income by $48, or $0.03 per share.



•

Expense recorded in conjunction with the termination of a long term contract with a vendor which reduced net income by $125, or $0.07 per share.

See the notes to our consolidated financial statements for further discussion of the above matters.

Events affecting comparability

Formation of Cingular Wireless

In October 2000, we contributed our domestic wireless voice and data operations to a joint venture with SBC Communications and formed Cingular Wireless (Cingular). We own an approximate 40% stake in Cingular, and share joint control with SBC. Accordingly, we account for our share of Cingular's results using the equity method. Prior to October 2000, we consolidated the revenues and expenses of these operations. As a result of this change, our 2000 results include nine months of revenues and expenses attributable to our former domestic wireless operations and three months of equity in earnings attributable to Cingular.

Adoption of SAB 101

During 2000, we adopted a new method of recognizing revenues and expenses derived from installation and activation activities. We did this to comply with new accounting guidance contained in SAB 101, which requires that revenues from such activities be deferred and recognized over the estimated life of the relationship with the customer. As required by SAB 101, we adopted the new method effective January 1, 2000. The adoption did not affect our reported earnings for the 2000 period but did decrease our reported revenues and expenses equally by $204. SAB 101 prohibited the restatement of prior period results; as a result, our reported 1999 and 1998 operating revenues and expenses are not comparable to the 2000 period. If SAB 101 had been in effect during all periods presented, our revenues and expenses would have

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been reduced equally by $254 in 1998 and $248 in 1999, with no impact on net income for any period.

On January 1, 1999, we adopted a new accounting standard on capitalization of internal-use software. We did not restate our 1998 results to conform to the new policy. The impact of capitalizing software costs under the new standard was a benefit of $285, or $0.15 per share, for 1999 compared to 1998 and $322, or $0.17 per share, for 2000 compared to 1998.

Operating Revenues

Our reported operating revenues increased $2,101 during 1999 and $927 during 2000. These changes reflect:

•

Growth in our wireline communications operations of $1,053 during 1999 and $609 during 2000, spurred by demand for digital and data services and calling features. Growth in wireline revenues was partially offset by the effects of rate reductions related to access charge reform and competition in both the local and the long distance market.



•

For domestic wireless operations, an increase of $468 in 1999 and a decrease of $477 in 2000. The increase in 1999 resulted from a 13.1% expansion in the customer base. The decrease during 2000 was due primarily to the contribution of our domestic wireless operations to Cingular, as explained above, which results in only nine months of revenue from reported domestic wireless operations.



•

Higher revenues from our international operations of $294 in 1999 and $482 in 2000, resulting from growth in the customer bases of our current operations of 62.8% in 1999 and 67.1% in 2000. The 2000 period increase also includes the addition of new wireless operations in Colombia. The increase in international revenues attributable to customer growth was partially offset by weakening economies, changes in foreign currency rates and decreases in average monthly revenue per customer. Average monthly revenue per customer decreased as a result of penetration into lower usage market segments and a growing percentage of customers selecting lower-volume prepaid services. The average monthly revenue per international wireless customer decreased 25.7% for 1999 and 34.6% for 2000.



•

Volume growth and price increases in our domestic advertising and publishing operations, growth from our international directory publishing businesses purchased in mid-1999 and increases in revenues from domestic electronic media offerings.



•

Growth in new lines of business.

Operating Expenses

Total operating expenses increased $1,568 during 1999 and $480 during 2000. Operating expenses for 1999 included a $320 asset impairment charge related to an equipment exchange program at our domestic wireless operations. Operating expenses for 2000 were impacted by several special items, including $528 of expense for restructuring and asset impairments, expense of $203 related to a contract termination settlement, a $78 severance accrual related to a plan to reduce our domestic general and administrative staff and gains from pension settlements which reduced expense by $362. Excluding these items, total operating expenses increased $1,248 during 1999 and $353 during 2000.

Increases in both periods resulted from higher levels of spending in the core wireline business customer service and network support functions, volume driven increases at our international businesses and expenses for development and promotion of new business initiatives, including high-speed data and Internet service offerings. Also included in the 2000 results is $164 in expense from our recently acquired properties in Colombia. These increases were offset by income of $158 in 1999 and $141 in 2000 as favorable pension plan returns exceeded expenses from other employee benefits. Expenses from domestic wireless operations during the 2000 period decreased $410 from 1999 to 2000, primarily as a result of the contribution of those operations to Cingular. Operational and support expenses of our international operations were favorably impacted by $175 in 1999 and $177 in 2000 from the weakening of foreign currencies against the U.S. Dollar.

Depreciation and amortization increased $314 in 1999 and $264 in 2000 primarily as a result of additions of property, plant, equipment and software to support expansion of our wireline communications and international wireless networks.

Operating expenses for the 2000 period also included a decrease of $204 resulting from the adoption of SAB 101. If SAB 101 had been in effect during all periods presented, expenses would have been reduced by $254 in 1998 and $248 in 1999. Operating expenses include reductions totaling $452 in 1999 and $725 in 2000 from the adoption of a new accounting standard on capitalization of internal-use software.

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Interest Expense

Interest expense increased $193 in 1999 and $298 in 2000. The 1999 increase was attributable to higher average debt balances resulting from commercial paper borrowings associated with the financing of our investment in Qwest and a higher portion of capitalized interest in 1998. Higher interest expense in 2000 is attributable to higher average long-term debt balances resulting from borrowings associated with the financing of our investments in Colombia and Brazil, the buyout of our partners in the Carolinas DCS business and higher interest rates.

Gain (loss) on sale of operations

Gains for 1998 include $180 from the sale of our 65% interest in BellSouth New Zealand and $155 from the receipt of additional proceeds related to the sale of our investment in ITT World Directories. Gains for 1999 include $39 from the sale of our 100% ownership interest in Honolulu Cellular and $16 from the sale of a wireless property in Alabama. During 2000, we sold our ownership interests in wireless data operations in Belgium, the Netherlands and the United Kingdom. These sales generated a pre-tax loss of $14.

Net earnings (losses) of equity affiliates

Earnings from our unconsolidated businesses decreased $261 in 1999 and increased $859 in 2000. The 1999 decrease includes $308 of foreign exchange losses related to our Brazilian properties. The 2000 increase includes a $479 gain from the redemption of AT&T from the AB Cellular partnership and $68 in income related to the restructuring of our ownership interest in our German wireless operations. The 2000 period also includes three months earnings from Cingular. Excluding the impacts of the Brazil devaluation, the gain from AB Cellular and the restructuring of the German wireless operations, earnings increased $47 in 1999 and $4 in 2000. These results are addressed in the discussions for the Domestic wireless, International operations and All other businesses segments. For more information on the special items mentioned above, see notes B and C to our consolidated financial statements.

Other income, net

Other income, net includes interest income, gains (losses) on disposition of assets, foreign currency gains (losses) and miscellaneous nonoperating income. The decrease of $62 in 1999 was attributable to a $67 reduction in interest income due to lower average cash balances and $23 of higher minority interest expense related to our less-than-100-percent owned subsidiaries, partially offset by miscellaneous nonoperating items. The change in 2000 is primarily attributable to increases of $202 from higher interest income, lower minority interest expense and changes in miscellaneous nonoperating items, partially offset by $11 in foreign currency losses.

Provision for income taxes

The provision for income taxes decreased $184 during 1999 and increased $338 during 2000. Our effective tax rate decreased from 38.7% in 1998 to 37.2% in 1999 and from 37.2% in 1999 to 36.0% in 2000.

The decrease in the 1999 effective tax rate was driven by the recognition of investment tax credits at our wireless operations in Venezuela and a change in the mix of income among taxing jurisdictions. These decreases were offset by less favorable results at foreign equity-method subsidiaries which are recorded net of tax benefits or expense. These results were significantly impacted by foreign currency losses recorded at our unconsolidated Brazilian businesses during 1999.

The decrease in the 2000 effective tax rate was driven by the impact of additional income related to the restructuring of our ownership in our German wireless operations, the recognition of tax incentives, tax benefits generated by the sale of our international wireless data properties and more favorable results from companies we report on the equity-method, which generally are recorded net of tax benefits or expense.

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Results by Segment

Our reportable segments reflect strategic business units that offer similar products and services and/or serve similar customers. We have four reportable operating segments:

•

Wireline communications;



•

Domestic wireless;



•

International operations;



•

Advertising and publishing.

We have included the operations of all other businesses falling below the reporting threshold in the "All other businesses" segment. We evaluate the performance of each business unit based on net income, exclusive of charges for use of intellectual property rights and adjustments for special items that may arise. Special items are transactions or events that are included in reported results but are excluded from segment results due to their nonrecurring or nonoperational nature.

The results of businesses in which we own noncontrolling interests are not included in our reported revenues and expenses but are included in the Net earnings (losses) of equity affiliates line item.

The following discussion highlights our performance in the context of these segments. For a more complete understanding of our industry, the drivers of our business, and our current period results, you should read this discussion in conjunction with our consolidated financial statements, including the related notes.

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Wireline Communications

Wireline communications includes local exchange, network access and limited long distance services provided by wireline transport to business and residential customers in a nine-state region located in the southeastern U.S.

Effective January 1, 2000, we adopted a new method of recognizing revenues and expenses derived from installation and activation activities. We did this to comply with new accounting guidance contained in SAB 101, which requires that revenues from such activities be deferred and recognized over the estimated life of the relationship with the customer. The adoption decreased our reported revenues and expenses equally by $204 for fiscal 2000 but did not affect our earnings for any period. For management purposes and in order to provide comparable revenue and expense data, we have adjusted the 1998 and 1999 periods to present the results which would have occurred if SAB 101 was adopted on January 1, 1998.

										Percent Change
				1998		1999		2000		1999 vs. 1998		2000 vs. 1999
Results of Operations:
Operating revenues:
	Local service			$	9,883	$	10,740	$	11,262	8.7		4.9
	Network access				4,563		4,695		4,885	2.9		4.0
	Long distance				713		608		523	(14.7	)	(14.0	)
	Other wireline				988		1,163		1,393	17.7		19.8
	Intersegment revenues				221		318		288	43.9		(9.4	)
			Total operating revenues		16,368		17,524		18,351	7.1		4.7
Operating expenses					11,497		11,696		12,143	1.7		3.8
Operating income					4,871		5,828		6,208	19.6		6.5
Segment net income				$	2,751	$	3,315	$	3,503	20.5		5.7
Key Indicators:
Access line counts (000's):
	Access lines:
		Residential			16,497		17,002		17,135	3.1		0.8
		Business			7,859		8,232		8,525	4.7		3.6
		Other			274		265		248	(3.3	)	(6.4	)
			Total access lines		24,630		25,499		25,908	3.5		1.6
	Access line equivalents(1)				12,584		17,770		28,321	41.2		59.4
			Total equivalent access lines		37,214		43,269		54,229	16.3		25.3
Resold lines and unbundled network elements (000's)					562		816		1,308	45.2		60.3
Access minutes of use (millions)					104,373		110,088		113,913	5.5		3.5
Long distance messages (millions)					784		644		504	(17.9	)	(21.7	)
Internet customers					377		695		956	84.4		37.6
ADSL customers					—		30		215	N/M		N/M
Digital and data services revenues				$	2,012	$	2,635	$	3,344	31.0		26.9
Calling feature revenues				$	1,639	$	1,913	$	2,145	16.7		12.1

(1)

Access line equivalents represent a conversion of non-switched data circuits to a switched access line basis and is presented for comparability purposes. Equivalents are calculated by converting high-speed/high-capacity data circuits to the equivalent of a switched access line based on transport capacity. While the revenues generated by access line equivalents have a directional relationship with these counts, growth rates cannot be compared on an equivalent basis.

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Operating Revenues

Local service

Local service revenues increased $857 during 1999 and $522 during 2000, attributable to strong demand for calling features and digital and data services.

Total equivalent access lines increased 16.3% during 1999 and 25.3% during 2000. Residential access lines rose 3.1% during 1999 and 0.8% during 2000. The growth in residential lines has slowed substantially as a result of increasing competition and slowing of economic growth in our wireline service area. Business access lines, including both switched access lines and data circuits, grew 27.1% during 1999 and 41.7% during 2000, propelled by expanding demand for our digital and data services, and offset by the effects of increasing competition.

Revenues from optional calling features such as caller ID, call waiting, call return and voicemail service increased $274, or 16.7%, during 1999 and $232, or 12.1%, during 2000. These increases were driven by demand for our Complete Choice® package, a one-price bundled offering of over 20 calling features. The 1999 increase also includes the effect of positive rate impacts on revenues from these features.

Increased penetration of extended local area calling plans also increased local service revenues by approximately $182 during 1999 and $168 during 2000.

Network access

Network access revenues grew $132 in 1999 and $190 in 2000. Access minutes of use rose 5.5% and 3.5% during the same periods. Increases in access lines and promotional activities by long distance carriers continue to be the primary drivers of the increase in minutes of use. The 2000 growth in minutes was also positively impacted by the additional day of activity resulting from the leap year.

The growth rate in total minutes of use continues to be negatively impacted by the trend of business customers migrating from traditional switched circuits to higher capacity data line offerings which are fixed-charge based rather than per-minute-of-use based. Revenues from these dedicated circuit services grew approximately $155 in 1999 and $296 in 2000 as Internet service providers and high-capacity users increased their use of our network. The growth rate in switched minutes of use has also been negatively impacted by competition from competitive local exchange carriers whose traffic completely bypasses our network.

Volume-related growth was largely offset by net rate impacts that decreased revenues by $158 in 1999 and $339 in 2000. These reductions are primarily related to the FCC's access reform and productivity factor adjustments. The reductions were partially offset by recoveries of local number portability costs in both 1999 and 2000.

Long distance

The decreases during 1999 and 2000 are primarily attributable to decreases in long distance message volumes of 17.9% in 1999 and 21.7% in 2000. The 2000 decrease in revenues attributable to the loss of message volumes was offset by a $30 revenue reduction in 1999 for a regulatory ruling related to compensation we received from long distance carriers for interconnection to our public payphones. Also offsetting the decreases were increased revenues from the provision of digital and data services of $21 in 1999 and $36 in 2000.

Competition and increased penetration of extended local area calling plans continue to have an adverse impact on the number of customers who use our long distance service and ultimately reduce our long distance message volumes and revenues. Effective February 1999, we implemented 1+ dialing parity in the last of the nine states in our region, which allows customers to choose a competing intraLATA long distance carrier without having to dial a special access code. We believe that competition will continue to adversely impact long distance message volumes and revenues until we are granted full long distance relief under the Telecommunications Act of 1996.

Other wireline and intersegment revenues

Other wireline and intersegment revenues increased 22.5%, from $1,209 in 1998 to $1,481 in 1999, and increased 13.5% to $1,681 in 2000. Higher revenues of $177 in 1999 and $293 in 2000 resulted primarily from sales of unbundled network elements, collocation of competing carriers' equipment in our facilities, interconnection charges to wireless carriers, demand for our Internet access offering and proceeds from universal service funds. At December 31, 2000 we had 956,000 subscribers to our BellSouth Internet Service, an increase of 37.6% compared to 1999. Revenues from sales of customer premises equipment and resale of paging services increased during 1999 but decreased during 2000. Intersegment revenues increased $97 during 1999 due to increased business activity with our other operating segments but

36

decreased during 2000 as interconnect revenues charged to domestic wireless operations shifted from intersegment to external revenues.

Operating Expenses

Operational and support expenses

Operational and support expenses increased $169, or 2.1%, during 1999 and $196, or 2.4%, during 2000. The 1999 and 2000 periods were impacted favorably by the adoption of new rules on software capitalization. Excluding the impact of adoption, the 1999 period would have included an additional $413 of expense compared to 1998, and the 2000 period would have included an additional $510 of expense compared to 1998.

Increases in 1999 were attributable to $551 of labor costs driven by the addition of employees in customer service and network support functions and increases in salary and wage rates, $100 of costs from sales of customer premises equipment and paging equipment and other increased expenses associated with higher business volumes. These increases were offset by $84 of reductions in overtime expense in customer service and network functions and income of $153 as favorable pension plan investment returns exceeded expenses from other employee benefits. Also included in the 1999 increases were expenses related to new data initiatives, including high-speed Internet access and optical fiber-based broadband services, and promotional expenses related to expanding our Internet customer base.

The increase in 2000 was primarily attributable to increases in labor costs and reciprocal compensation expense totaling $230. Also contributing to this increase was expenses related to new data initiatives, including high-speed Internet access and optical fiber-based broadband services, and promotional expenses related to expanding our Internet customer base. These increases were offset by income of $106 as favorable pension plan returns exceeded expenses from other employee benefits.

Depreciation and amortization

Depreciation and amortization expense increased $30 during 1999 and $251 during 2000. The increases are primarily attributable to amortization of capitalized internally developed software and depreciation resulting from higher levels of net property, plant and equipment.

Domestic Wireless

During fourth quarter 2000, we contributed our domestic wireless operations to Cingular, and we account for our investment in Cingular under the equity method. For management purposes, however, we evaluate Cingular's results based on our proportionate share of Cingular's results. Accordingly, the operating revenues and expenses reported for our domestic wireless segment reflect 40% of Cingular's total revenues and expenses.

Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results.

							Percent Change
	1998		1999(1)		2000		1999 vs. 1998		2000 vs. 1999
Total operating revenues	$	2,968	$	3,486	$	4,219	17.5		21.0
Operating expenses		2,594		3,158		3,608	21.7		14.2
Operating income		374		328		611	(12.3	)	86.3
Net earnings (losses) of equity affiliates		165		144		145	(12.7	)	0.7
Segment net income		283		234		357	(17.3	)	52.6
Customers(2)		4,320		4,887		8,337	13.1		70.6
Average monthly revenue per customer(2)	$	58	$	57	$	56	(1.7	)	(1.8	)

(1)

1999 results exclude the impact of an asset impairment loss described in note D to the consolidated financial statements. 1999 results also exclude gains from the sale of wireless properties in Honolulu and Dothan described in note C to the consolidated financial statements.

(2)

The amounts shown are for our consolidated properties and/or proportionate share of Cingular's operating results and do not include customer data for any of our previously-held unconsolidated businesses.

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Operating Revenues

Total operating revenues grew $518, or 17.5%, during 1999 and $733, or 21.0%, during 2000. These increases are attributable to higher airtime, access and equipment sales revenues driven by organic customer growth and, for 2000, the higher customer base created by the formation of Cingular. Customer growth in both years was driven by advertising, enhanced volume pricing strategies such as one-rate plans, rollover minute plans, bundled minutes at lower rates and prepaid calling plans and competitive incentive programs such as discounted wireless handsets. Average monthly usage by customers increased during 1999 and 2000 and, when combined with the increase in total customers, drove increases in total minutes of use. Average monthly revenue per customer remained relatively flat during 1999 and 2000 due primarily to declines in per-minute rates in response to competition and further penetration into lower-usage market segments.

We expect competition to continue to intensify and pressure pricing in the markets that Cingular serves. We believe this will further stimulate customer growth and demand and continue to increase usage as the overall market is expanded.

Operating Expenses

Operational and support expenses

Operational and support expenses increased $421, or 20.2%, during 1999 and $493, or 19.7%, during 2000. These increases are due to higher customer acquisition costs, higher network costs associated with network usage and costs related to new customer promotions. Higher customer acquisition costs resulted from customer growth of 13.1% in 1999 and 70.6% in 2000. Network usage and the related expense have increased as a result of customer and volume growth in established markets.

Depreciation and amortization

Depreciation and amortization increased $143, or 27.9%, during 1999 and decreased $43, or 6.6%, during 2000. The increase in 1999 was primarily attributable to the additions of property, plant and equipment totaling $550. These additions were primarily attributable to the build-out of PCS markets, expansion of the network related to growth in the customer base and deployment of digital cellular across all of our consolidated markets. The 1999 increase is also attributable to accelerated depreciation on network equipment that, as part of an equipment exchange program, was replaced over an 18 month period from June 1999 through December 2000. Depreciation expense in 2000 was favorably impacted by the lower asset base which resulted from the equipment exchange program.

Net Earnings (Losses) of Equity Affiliates

Net earnings (losses) of unconsolidated domestic wireless businesses decreased $21 in 1999 and remained relatively flat in 2000. The 1999 decrease is principally due to lower earnings at our business in Los Angeles, attributable to higher acquisition costs associated with customer additions and increased amortization expense that resulted from the reorganization of our ownership interests in fourth quarter 1998.

International Operations

International operations is comprised principally of our investments in wireless businesses in eleven countries in Latin America as well as in Denmark, Germany, India and Israel. Consolidated operations include our businesses in Argentina, Chile, Colombia, Ecuador, Nicaragua, Peru and Venezuela. The 1998 period results also include the results of BellSouth New Zealand, which was sold in fourth quarter 1998. All other businesses are accounted for under the equity method, and accordingly their results are reported as Net earnings (losses) of equity affiliates.

										Percent Change
	1998			1999(1)			2000			1999 vs. 1998		2000 vs. 1999
Total operating revenues	$	1,995		$	2,291		$	2,810		14.8		22.7
Operating expenses		1,761			2,173			2,765		23.4		27.2
Operating income		234			118			45		(49.6	)	(61.9	)
Net losses of equity affiliates		(69	)		(2	)		(68	)	N/M		N/M
Segment net loss		(62	)		(4	)		(170	)	N/M		N/M
Customers(2)		2,598			4,230			7,069		62.8		67.1
Average monthly revenue per customer(2)	$	70		$	52		$	34		(25.7	)	(34.6	)

(1)

1999 results exclude the impact of the Brazil devaluation which is discussed in note B to the consolidated financial statements.

(2)

The amounts shown are for our consolidated properties and do not include customer data for our unconsolidated properties.

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Operating Revenues

The increases of $296 during 1999 and $519 during 2000 are primarily due to substantial growth in the customer bases of our consolidated operations, which collectively have increased 62.8% in 1999 and 67.1% in 2000. Partially offsetting the impacts of customer growth were impacts from weakened economies in Peru and Argentina. Growth was further offset by declining monthly revenue per customer resulting from continued expansion into lower-usage customer segments through offerings such as prepaid cellular service and competitive pressures in certain countries. We now offer prepaid cellular products to all of the countries we serve in Latin America. Revenue growth in 1999 was negatively affected by the absence of revenues from BellSouth New Zealand, which was sold in fourth quarter 1998. The 2000 increase also includes $147 of revenues attributable to our new Colombian wireless operations and the consolidation of the Nicaraguan operations beginning first quarter 2000.

A stronger U.S. Dollar against foreign currencies has had a negative impact on reported revenues. Absent changes in foreign currency exchange rates, reported revenues would have increased $534 in 1999 and $808 in 2000.

Operating Expenses

Operational and support expenses

Operational and support expenses increased $327, or 23.3%, in 1999 and $437, or 25.2%, in 2000. These increases are primarily the result of operational and customer acquisition costs associated with growth in customer levels and expanded operations. Since 1998, our existing operations have added 3.3 million customers in Argentina, Chile and Venezuela. We have also added approximately 1.2 million customers through the acquisition and development of businesses in Colombia, Ecuador, Nicaragua and Peru. The 2000 increase also includes $125 of expenses attributable to our new Colombian wireless operations and the consolidation of the Nicaraguan operations beginning first quarter 2000.

Operational and support expenses denominated in local currencies were favorably impacted by the weakening of foreign currencies against the U.S. Dollar. Absent changes in foreign currency exchange rates, reported operational and support expenses would have increased $502 in 1999 and $614 in 2000.

Depreciation and amortization

Depreciation expense increased $64 in 1999 and $92 in 2000. These increases are due primarily to higher gross depreciable plant resulting from the continued investment in our wireless network infrastructure. Amortization expense increased $21 during 1999 and $63 during 2000 as a result of growth in intangibles related to our purchase of additional ownership interests in several Latin American operations.

Net Losses of Equity Affiliates

Net losses from our international equity affiliates improved $67 to $(2) in 1999 and decreased $66 to $(68) in 2000.

The increase in 1999 is due to stronger results from our investments in Germany, Nicaragua and Panama. All of these businesses experienced substantial growth in their customer bases during the 1998-1999 period. Offsetting these improvements were losses related to our operations in Brazil; these losses were attributable to costs associated with the start-up of operations during 1998 and economic weakness in the region during 1999.

The decline in earnings from our unconsolidated international businesses during the 2000 period is due to lower operating results from our investments in Brazil and Germany. Both of these businesses experienced significant increases in operational and customer acquisition costs resulting from substantial growth in their customer bases. In addition, a depreciating currency in Brazil resulted in higher foreign currency losses of $73.

Our operations in Brazil continue to be affected by weakness in the local economy. Operational revenues have been negatively impacted as the weakened currency has caused average revenue per subscriber to decline. In addition, we expect that our earnings will continue to be affected by foreign currency gains or losses associated with the U.S. Dollar-denominated debt issued by our Brazilian businesses.

39

Advertising and Publishing

Our advertising and publishing segment is comprised of companies in the U.S. and Latin America that publish, print, sell advertising in and perform related services concerning alphabetical and classified telephone directories and electronic product offerings.

									Percent Change
			1998		1999		2000		1999 vs. 1998	2000 vs. 1999
Operating revenues:
	External revenues		$	1,891	$	2,010	$	2,178	6.3	8.4
	Intersegment revenues			—		18		22	N/M	22.2
		Total operating revenues		1,891		2,028		2,200	7.2	8.5
Operating expenses				1,042		1,127		1,163	8.2	3.2
Operating income				849		901		1,037	6.1	15.1
Segment net income				530		556		637	4.9	14.6

Operating Results

External revenues increased $119 during 1999 and $168 during 2000. The 1999 increase was principally a result of $69 in revenues from our new directory publishing operations in Peru and Brazil. To a lesser extent, the increased revenues were driven by volume growth and price increases in the domestic operations. Increases in revenues of $14 from our electronic media offerings also contributed.

The 2000 increase resulted principally from $74 in growth at the domestic advertising and publishing operations driven by volume growth and price increases. In addition, our directory publishing operations in Peru and Brazil contributed $66 to the increase. Also contributing to the 2000 increase was an increase of $28 in the revenues from our domestic electronic media offerings.

Operational and support expenses increased $79 in 1999 and $31 in 2000. These increases are primarily due to growth at our operations in Peru and Brazil totaling $71 for 1999 and $59 for 2000. Also contributing to the increases are costs of $26 for 1999 and $17 for 2000 associated with growth in electronic media offerings. These increases were offset by lower costs of $18 in 1999 and $45 in 2000 at the domestic directory businesses attributable to expense control efforts. Depreciation and amortization remained relatively flat in both 1999 and 2000.

All Other Businesses

This segment is primarily comprised of new business initiatives such as entertainment (cable and wireless television), Internet access marketing, wireless data and long distance. The stand-alone revenues and expenses of our Internet access marketing company which are included in this segment are eliminated in consolidation and reported as part of the wireline communications results.

											Percent Change
		1998			1999			2000			1999 vs. 1998		2000 vs. 1999
External revenues		$	113		$	280		$	425		147.8		51.8
Intersegment revenues			227			371			413		63.4		11.3
	Total operating revenues	$	340		$	651		$	838		91.5		28.7
Operating expenses		$	700		$	971		$	1,084		38.7		11.6
Operating loss		$	(360	)	$	(320	)	$	(246	)	11.1		23.1
Segment net loss		$	(210	)	$	(215	)	$	(189	)	(2.4	)	12.1

40

Operating Results

External revenues increased $167 in 1999 and $145 in 2000, primarily driven by growth in revenues of $59 in 1999 and $71 in 2000 from the resale of long distance services in markets outside of our wireline region, $27 in 1999 and $16 in 2000 from interactive paging services and $31 in 1999 and $24 in 2000 from wireless television offerings.

Operating expenses for 1999 and 2000 reflect increased spending associated with new product and/or market introductions in all of these businesses. Higher headcount associated with customer support and installation functions also contributed to the increase in operational and support expenses of $223 in 1999 and $78 in 2000. Depreciation and amortization has increased $48 in 1999 and $35 in 2000 reflecting our continuing investment of resources associated with the growth of these businesses.

During 2000, we announced that we would restructure our wireless video entertainment business. See note N to our consolidated financial statements for a discussion of this event.

Financial Condition

Cash flows from operations are our primary source of funding for capital requirements of existing operations, debt service and dividends. We also have ready access to capital markets in the event additional funding is necessary. While current liabilities exceed current assets, our sources of funds—primarily from operations and, to the extent necessary, from readily available external financing arrangements—are sufficient to meet all current obligations on a timely basis. We believe that these sources of funds will be sufficient to meet the needs of our business for the foreseeable future.

Net cash provided by (used for):

										Percent Change
	1998			1999			2000			1999 vs. 1998		2000 vs. 1999
Operating activities	$	7,741		$	8,199		$	8,590		5.9		4.8
Investing activities	$	(5,487	)	$	(9,888	)	$	(9,303	)	(80.2	)	5.9
Financing activities	$	(1,681	)	$	(167	)	$	487		N/M		N/M

Net cash provided by operating activities

Cash generated by operations increased $458 during 1999 and $391 during 2000. The 1999 increase was primarily attributable to higher operating revenues, cash proceeds of $632 associated with the sublease of wireless towers to Crown Castle International and the impact of the adoption of SOP 98-1. Partially offsetting these impacts were higher operating expenses and working capital requirements to support growth in our core wireline business, substantial increases in the wireless customer base and new initiatives such as Internet, wireless data, long distance and video.

The increase for the 2000 period was driven by higher revenues but was offset significantly by a $530 decrease in proceeds from the sublease of wireless towers and increases in working capital demands attributable to the factors which were discussed for 1999.

Net cash used for investing activities

During 2000, we invested $7.0 billion for capital expenditures to support our wireline and wireless networks, to promote the introduction of new products and services and increase operating efficiency and productivity. We continue to make significant investments that support deployment of high-speed Internet access and optical fiber-based broadband services. Also included in these expenditures for 2000 is approximately $725 in costs related to the purchase and development of internal-use software.

Also during 2000, we paid approximately $1.8 billion to acquire new or additional interests in our domestic and international wireless businesses. Included in this amount is $299 for our investment in Celumóvil (Colombia), $414 for the purchase of Cocelco (Colombia), $885 to buy out our partners in the Carolinas DCS partnerships and $240 for our investment in Tele Centro Oeste (Brazil).

In addition to amounts paid for purchases, we advanced approximately $443 to our partner in our German wireless operations which was used toward the

41

purchase of new third generation wireless licenses from the German government.

We funded these activities through the issuance of new debt, including commercial paper and short-term loans with banks.

Net cash provided by (used for) financing activities

During 2000, our financing activities resulted in net proceeds of $487 as compared to a net use of $167 during 1999. Net proceeds from issuances of debt decreased as we used available cash and refinancings to pay down debt. During 2000, we issued $3.8 billion of long-term debt and used the proceeds from those issuances to retire commercial paper borrowings.

We repurchase shares of our common stock when we consider market conditions and other factors to be favorable, and plan to continue this practice in the future. During 2000, we repurchased approximately 19 million shares of our stock for $779.

Our debt to total capitalization ratio was 53.1% at December 31, 1999 compared to 54.2% at December 31, 2000. The change is primarily a function of increases in long-term debt driven by borrowings to finance acquisitions of new and additional interests in wireless businesses and other investing activities.

At February 28, 2001, we have a shelf registration statement on file with the SEC under which $1.2 billion of debt securities could be publicly offered.

Quantitative and Qualitative Disclosure About Market Risk

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and foreign currency exchange rate fluctuations. To manage this exposure, we employ risk management strategies including the use of derivatives such as interest rate swap agreements, foreign currency forwards and currency swap agreements. We do not hold derivatives for trading purposes.

Interest Rate Risk

Our objective in managing interest rate risk is to maintain a balance of fixed and variable rate debt that will lower our overall borrowing costs within reasonable risk parameters. Interest rate swaps are used to convert a portion of our debt portfolio from a variable rate to a fixed rate or from a fixed rate to a variable rate.

Foreign Exchange Risk

Our objective in managing foreign exchange risk is to protect against cash flow and earnings volatility resulting from changes in foreign exchange rates. Short-term foreign currency transactions and commitments expose us to changes in foreign exchange rates. We occasionally enter into forward contracts and similar instruments to mitigate the potential impacts of such risks.

Our equity investments in Brazil hold U.S. Dollar-denominated liabilities and recognize foreign currency gains or losses when converting those liabilities into local currency. Our proportionate share of these liabilities was $1.13 billion at December 31, 2000. The equity income related to these investments is subject to fluctuations in the U.S. Dollar/Brazilian Real exchange rate. See "MD&A—Operating Environment and Trends of the Business—International Operations."

We are subject to risk from changes in foreign exchange rates for our international operations which use a foreign currency as their functional currency and are translated to U.S. Dollars. Such changes result in cumulative translation adjustments which are included in shareholders' equity. We have translation exposure to various foreign currencies with the most significant being the Brazilian Real, the Euro and the Colombian Peso. Operations in countries with hyperinflationary economies consider the U.S. Dollar the functional currency and reflect translation gains and losses in the determination of net income.

Risk Sensitivity

Our use of derivative financial instruments is designed to mitigate foreign currency and interest rate risks, although to some extent they expose us to credit risks. The credit risks associated with these instruments are controlled through the evaluation and continual monitoring of the creditworthiness of the counterparties. In the event that a counterparty fails to meet the terms of a contract or agreement, our exposure is limited to the current value at that time of the currency rate or interest rate differential and not the full notional or contract amount. Such contracts and agreements have been executed with creditworthy financial institutions, and as such, we consider the risk of nonperformance to be remote.

42

The following table provides information, by maturity date, about our interest rate sensitive financial instruments, which consist of fixed and variable rate debt obligations. Fair values for the majority of our long-term debt obligations are based on quotes from dealers.

		2001			2002			2003			2004			2005			Thereafter			Total Recorded Amount		Fair Value
Debt:
	Fixed rate debt	$	7,115		$	329		$	861		$	300		$	450		$	8,410		$	17,465	$	17,292
	Average interest rate		7.03	%		8.04	%		7.19	%		6.62	%		6.89	%		6.92	%
	Variable rate debt	$	436		$	1,800		$	6		$	181		$	200		$	23		$	2,646	$	2,647
	Average interest rate		9.70	%		6.53	%		5.99	%		7.24	%		7.30	%		17.73	%

Operating Environment and Trends of the Business

Regulatory Developments

Our future operations and financial results will be substantially influenced by developments in a number of federal and state regulatory proceedings. Adverse results in these proceedings could materially affect our revenues, expenses and ability to compete effectively against other telecommunications carriers.

Federal policies being implemented by the Federal Communications Commission (FCC) strongly favor access reform, whereby the historical subsidy for local service that is contained in network access charges paid by long distance carriers is eliminated. Unless permanent compensatory changes are adopted, such as universal service fund contribution mandates, our revenues from this source, which constituted approximately 4.8% of our revenues during 2000, could be at risk. In addition, other aspects of access charge regulation and universal service fund contribution requirements that are applicable to local service carriers, such as our wholly-owned subsidiary BellSouth Telecommunications, Inc., are also under consideration and could result in greater expense levels or reduced revenues.

The FCC has considerable authority to establish pricing, interconnection and other policies that had once been considered within the exclusive jurisdiction of the state public service commissions. We expect the FCC to continue policies that promote local service competition.

We have petitioned the FCC for permission under the Telecommunications Act of 1996 to offer full long distance services in South Carolina and Louisiana. The FCC has denied these petitions. We are currently conducting third-party tests of our operating support systems in Georgia and Florida and expect to submit to the FCC applications to offer full long-distance wireline service in Georgia, Florida and our other states when testing and verification of our performance data are complete. We do not know if the FCC will require further changes in our network interconnection elements and operating systems before it will approve such petitions. These changes could result in significant additional expenses and promote local service competition.

Our intrastate prices are regulated under price regulation plans provided by statute or approved by state public service commissions. Some plans are subject to periodic review and may require renewal. These commissions generally may require price reductions and other concessions from us as a condition to approving these plans.

Competition

There are many competitive forces that impact our businesses. The Telecommunications Act of 1996 removed the regulatory barriers to local service competition in the wireline market and required incumbent carriers such as us to open our networks to other carriers. In the wireless market, the auction of PCS licenses has created as many as six new wireless competitors in domestic markets in addition to resellers, and the deregulation of international communications markets has introduced new global competitors to nearly all of our international businesses.

We expect local service competition to steadily increase, particularly with respect to business customers. We are losing market share with respect to business customers, particularly small business customers. Our business customers produce higher profit margins for us than residential customers. Competition for local service revenues could adversely affect our results of operations if lost revenues are not offset by revenues arising from our being authorized to offer in-region interLATA long distance wireline services, or from revenues arising from our other initiatives, such

43

as data and broadband services. It is uncertain when we will be authorized to offer in-region interLATA long distance wireline services.

The presence of multiple aggressive competitors in our domestic and international wireless markets makes it more difficult for Cingular and for us to attract new customers and retain existing ones. Furthermore, while we do not compete primarily on the basis of price, low prices offered by competitors attempting to obtain market share have pressured us to reduce prices and develop pricing plans attractive to lower usage customers. These trends are expected to continue and could adversely affect our results of operations in the future.

We plan to compete through aggressive marketing, competitive pricing, bundled services and technical innovation. We will offer consumers a full range of services—local, long distance, Internet access, wireless and more—while remaining committed to our high level of customer service and value.

Technology

We are continually upgrading our networks with digital and optical technologies, making them capable of delivering a full complement of voice and data services. This modernization of the network is critical to our success in providing the data connectivity demanded by customers and to compete with fiber networks being constructed or currently utilized by start-ups and cable companies. This continuing effort will require investment of significant amounts of capital in the future.

Digital wireless technology is rapidly evolving and the development of a common roaming platform for digital wireless technologies could result in more intense competition and have an adverse effect on our results of operations.

Domestic Economic Trends

Recent economic indicators show evidence of a deceleration in growth in our region. If this trend worsens, our revenues and ultimately our earnings could be negatively affected.

International Operations

Our reporting currency is the U.S. Dollar. However, most of our revenues are generated in the currencies of the countries in which we operate. In addition, many of our operations and equity investees hold U.S. Dollar-denominated short- and long-term debt. The currencies of many Latin American countries have experienced substantial volatility and depreciation in the past. Declines in the value of the local currencies in which we are paid relative to the U.S. Dollar will cause revenues in U.S. Dollar terms to decrease and dollar-denominated liabilities to increase. Where we consider it to be economically feasible, we attempt to limit our exposure to exchange rate fluctuations by using foreign currency forward exchange contracts or similar instruments as a vehicle for hedging; however, a substantial amount of our exposures are unhedged.

The impact of a devaluation or depreciating currency on an entity depends on the residual effect on the local economy and the ability of an entity to raise prices and/or reduce expenses. Our ability to raise prices is limited in many instances by government regulation of tariff rates and competitive constraints. Due to our constantly changing currency exposure and the potential substantial volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations on our business.

Economic, social and political conditions in Latin America are, in some countries, unfavorable and volatile, which may impair our operations. These conditions could make it difficult for us to continue development of our business, generate revenues or achieve or sustain profitability. Historically, recessions and volatility have been primarily caused by: mismanagement of monetary, exchange rate and/or fiscal policies; currency devaluations; significant governmental influence over many aspects of local economies; political and economic instability; unexpected changes in regulatory requirements; social unrest or violence; slow or negative economic growth; imposition of trade barriers; and wage and price controls.

Most or all of these factors have occurred at various times in the last two decades in our core Latin American markets. We have no control over these matters. Economic conditions in Latin America are generally less attractive than those in the U.S., and poor social, political and economic conditions may inhibit use of our services which may adversely impact our business.

Legal Matters

We are involved in numerous legal proceedings associated with state and federal regulatory matters, the disposition of which could materially impact our operating results and prospects. See note M to our consolidated financial statements.

New Accounting Pronouncements

See note A to our consolidated financial statements.

44

Cautionary Language Concerning Forward-Looking Statements

In addition to historical information, this document contains forward-looking statements regarding events and financial trends that may affect our future operating results, financial position and cash flows. These statements are based on our assumptions and estimates and are subject to risks and uncertainties. For these statements, we claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.

There are possible developments that could cause our actual results to differ materially from those forecast or implied in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which are current only as of the date of this filing. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

While the below list of cautionary statements is not exhaustive, some factors that could affect future operating results, financial position and cash flows and could cause actual results to differ materially from those expressed in the forward-looking statements are:

•

a change in economic conditions in domestic or international markets where we operate or have material investments which would affect demand for our services;



•

significant deterioration in foreign currencies relative to the U.S. dollar in foreign countries in which we operate;



•

changes in U.S. or foreign laws or regulations, or in their interpretation, which could result in the loss, or reduction in value, of our licenses, concessions or markets, or in an increase in competition, compliance costs or capital expenditures;



•

a decrease in the growth rate of demand for the services which we offer;



•

the intensity of competitive activity and its resulting impact on pricing strategies and new product offerings;



•

protracted delay in our entry into the interLATA long distance market;



•

higher than anticipated start-up costs or significant up-front investments associated with new business initiatives;



•

unanticipated higher capital spending from, or delays in, the deployment of new technologies; and



•

the impact of the wireless joint venture with SBC Communications, known as Cingular Wireless, including marketing and product development efforts and financial capacity.

45

REPORT OF MANAGEMENT

To the Shareholders of BellSouth Corporation:

These financial statements have been prepared in conformity with generally accepted accounting principles and have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report is contained herein.

The integrity and objectivity of the data in these financial statements, including estimates and judgments relating to matters not concluded by the end of the year, are the responsibility of the management of BellSouth. Management has also prepared all other information included therein unless indicated otherwise.

Management maintains a system of internal accounting controls which is continuously reviewed and evaluated. However, there are inherent limitations that should be recognized in considering the assurances provided by any system of internal accounting controls. The concept of reasonable assurance recognizes that the cost of a system of internal accounting controls should not exceed, in management's judgment, the benefits to be derived. Management believes that BellSouth's system does provide reasonable assurance that the transactions are executed in accordance with management's general or specific authorizations and are recorded properly to maintain accountability for assets and to permit the preparation of financial statements in conformity with generally accepted accounting principles. Management also believes that this system provides reasonable assurance that access to assets is permitted only in accordance with management's authorizations, that the recorded accountability for assets is compared with the existing assets at reasonable intervals and that appropriate action is taken with respect to any differences. Management also seeks to assure the objectivity and integrity of its financial data by the careful selection of its managers, by organizational arrangements that provide an appropriate division of responsibility and by communications programs aimed at assuring that its policies, standards and managerial authorities are understood throughout the organization. Management is also aware that changes in operating strategy and organizational structure can give rise to disruptions in internal controls. Special attention is given to controls while the changes are being implemented.

Management maintains a strong internal auditing program that independently assesses the effectiveness of the internal controls and recommends possible improvements thereto. In addition, as part of its audit of these financial statements, PricewaterhouseCoopers LLP completed a review of the accounting controls to establish a basis for reliance thereon in determining the nature, timing and extent of audit tests to be applied. Management has considered the internal auditor's and PricewaterhouseCoopers LLP's recommendations concerning the system of internal controls and has taken actions that it believes are cost-effective in the circumstances to respond appropriately to these recommendations. Management believes that the system of internal controls was adequate to accomplish the objectives discussed herein.

Management also recognizes its responsibility for fostering a strong ethical climate so that BellSouth's affairs are conducted according to the highest standards of personal and corporate conduct and in compliance with applicable laws and regulations. This responsibility is communicated to all employees through policies and guidelines addressing such issues as conflict of interest, safeguarding of BellSouth's real and intellectual properties, providing equal employment opportunities and ethical relations with customers, suppliers and governmental representatives. BellSouth maintains a program to assess compliance with these policies and our ethical standards through its Senior Vice President—Corporate Compliance and Corporate Secretary.

/s/ F. Duane Ackerman
F. Duane Ackerman
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

/s/ Ronald M. Dykes
Ronald M. Dykes
CHIEF FINANCIAL OFFICER

February 26, 2001

46

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders
BellSouth Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of shareholders' equity and comprehensive income present fairly, in all material respects, the financial position of BellSouth Corporation and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note A to the consolidated financial statements, in 1999 BellSouth Corporation adopted AICPA Statement of Position 98-1 and changed its method of accounting for internal-use software development costs.

As discussed in Note A to the consolidated financial statements, in 2000 BellSouth Corporation adopted Staff Accounting Bulletin No. 101 and changed its method of accounting for certain revenues.

/s/ PRICEWATERHOUSECOOPERS LLP

Atlanta, Georgia
February 26, 2001

47

BELLSOUTH CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

			For the years ended December 31,
			1998		1999			2000
Operating Revenues:
Wireline communications:
	Local service		$	10,033	$	10,887		$	11,262
	Network access			4,632		4,761			4,885
	Long distance			713		608			523
	Other wireline			1,023		1,198			1,393
		Total wireline communications		16,401		17,454			18,063
Domestic wireless				2,723		3,191			2,714
International operations				1,995		2,289			2,771
Advertising and publishing				1,891		2,010			2,178
Other				113		280			425
		Total Operating Revenues		23,123		25,224			26,151
Operating Expenses:
Operational and support expenses				12,862		13,796			13,726
Depreciation and amortization				4,357		4,671			4,935
Severance accrual				—		—			78
Provision for restructuring and asset impairments				—		320			528
		Total Operating Expenses		17,219		18,787			19,267
Operating income				5,904		6,437			6,884
Interest expense				837		1,030			1,328
Gain (loss) on sale of operations				335		55			(14	)
Net earnings (losses) of equity affiliates				92		(169	)		690
Other income, net				257		195			366
Income Before Income Taxes				5,751		5,488			6,598
Provision for Income Taxes				2,224		2,040			2,378
		Net Income	$	3,527	$	3,448		$	4,220
Weighted-Average Common Shares Outstanding:
Basic				1,970		1,898			1,876
Diluted				1,984		1,916			1,891
Earnings Per Share:
Basic			$	1.79	$	1.82		$	2.25
Diluted			$	1.78	$	1.80		$	2.23
Dividends Declared Per Common Share			$	.73	$	.76		$	.76

The accompanying notes are an integral part of these consolidated financial statements.

48

BELLSOUTH CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

				December 31, 1999			December 31, 2000
ASSETS
Current Assets:
Cash and cash equivalents				$	1,287		$	1,061
Temporary cash investments					105			37
Accounts receivable, net of allowance for uncollectibles of $312 and $377					5,177			5,157
Material and supplies					451			379
Other current assets					367			772
	Total Current Assets				7,387			7,406
Investments and Advances					6,097			11,010
Property, Plant and Equipment, net					24,631			24,157
Deferred Charges and Other Assets					1,564			4,180
Intangible Assets, net					3,774			4,172
			Total Assets	$	43,453		$	50,925
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year				$	7,653		$	7,569
Accounts payable					1,961			2,233
Other current liabilities					3,781			3,468
		Total Current Liabilities			13,395			13,270
Long-Term Debt					9,113			12,463
Noncurrent Liabilities:
Deferred income taxes					2,831			3,580
Other noncurrent liabilities					3,299			4,700
		Total Noncurrent Liabilities			6,130			8,280
Shareholders' Equity:
Common stock, $1 par value (8,650 shares authorized; 1,883 and 1,872 shares outstanding)					2,020			2,020
Paid-in capital					6,771			6,740
Retained earnings					11,456			14,074
Accumulated other comprehensive income					(358	)		(488	)
Shares held in trust and treasury					(4,798	)		(5,222	)
Guarantee of ESOP debt					(276	)		(212	)
		Total Shareholders' Equity			14,815			16,912
			Total Liabilities and Shareholders' Equity	$	43,453		$	50,925

The accompanying notes are an integral part of these consolidated financial statements.

49

BELLSOUTH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

		For the Years Ended December 31,
		1998			1999			2000
Cash Flows from Operating Activities:
Net income		$	3,527		$	3,448		$	4,220
Adjustments to net income:
	Depreciation and amortization		4,357			4,671			4,935
	Severance accrual		—			—			78
	Provision for restructuring and asset impairments		—			320			528
	Provision for uncollectibles		334			365			372
	Pension income		(259	)		(421	)		(693	)
	Pension settlement gain		—			—			(362	)
	Net (earnings) losses of equity affiliates		(92	)		169			(690	)
	Dividends received from equity affiliates		174			97			156
	Minority interests in income of subsidiaries		33			57			9
	Deferred income taxes and investment tax credits		304			(54	)		615
	(Gain) loss on sale of operations		(335	)		(55	)		14
Net change in:
	Accounts receivable and other current assets		(458	)		(860	)		(1,000	)
	Accounts payable and other current liabilities		300			49			591
	Deferred charges and other assets		1			(86	)		(169	)
	Other liabilities and deferred credits		(58	)		316			(236	)
Other reconciling items, net			(87	)		183			222
Net cash provided by operating activities			7,741			8,199			8,590
Cash Flows from Investing Activities:
Capital expenditures			(5,212	)		(6,200	)		(6,995	)
Investments in and advances to equity affiliates			(637	)		(138	)		(576	)
Acquisitions, net of cash acquired			(428	)		(3,745	)		(1,836	)
Purchases of wireless licenses			(69	)		(123	)		(93	)
Proceeds from sale of operations			410			215			23
Purchases of short-term investments			(236	)		(143	)		(507	)
Proceeds from disposition of short-term investments			210			59			570
Proceeds from repayment of loans and advances			432			83			61
Other investing activities, net			43			104			50
Net cash used for investing activities			(5,487	)		(9,888	)		(9,303	)
Cash Flows from Financing Activities:
Net (repayments) borrowings of short-term debt			(71	)		4,070			(1,140	)
Proceeds from long-term debt			1,752			522			4,176
Repayments of long-term debt			(782	)		(217	)		(451	)
Dividends paid			(1,420	)		(1,449	)		(1,427	)
Purchase of treasury shares			(1,261	)		(3,120	)		(779	)
Other financing activities, net			101			27			108
Net cash (used for) provided by financing activities			(1,681	)		(167	)		487
Net Increase (Decrease) in Cash and Cash Equivalents			573			(1,856	)		(226	)
Cash and Cash Equivalents at Beginning of Period			2,570			3,143			1,287
Cash and Cash Equivalents at End of Period		$	3,143		$	1,287		$	1,061

The accompanying notes are an integral part of these consolidated financial statements.

50

BELLSOUTH CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

AND COMPREHENSIVE INCOME
(IN MILLIONS)

		Number of Shares			Amount
		Common Stock	Shares Held In Trust and Treasury		Common Stock		Paid-in Capital			Retained Earnings			Accum. Other Compre- hensive Income (Loss)			Shares Held In Trust and Treasury			Guarantee of ESOP Debt			Total
			(a)													(a)
Balance at December 31, 1997		1,010	(18	)	$	1,010	$	7,714		$	7,382		$	36		$	(575	)	$	(402	)	$	15,165
Two-for-one stock split (note F)		1,010	(19	)		1,010		(1,010	)														—
Net income											3,527												3,527
Other comprehensive income, net of tax:
	Foreign currency translation adjustment													(100	)								(100	)
Total comprehensive income																							3,427
Dividends declared											(1,435	)											(1,435	)
Share issuance for employee benefit plans			3					(36	)		(2	)					89						51
Acquisition — related transactions			1					92									33						125
Purchase of treasury stock			(36	)													(1,261	)					(1,261	)
Purchase of stock by grantor trusts			(1	)													(38	)					(38	)
Tax benefit related to stock options								6															6
ESOP activities and related tax benefit											7									63			70
Balance at December 31, 1998		2,020	(70	)	$	2,020	$	6,766		$	9,479		$	(64	)	$	(1,752	)	$	(339	)	$	16,110
Net income											3,448												3,448
Other comprehensive income, net of tax:
	Foreign currency translation adjustment													(134	)								(134	)
	Net unrealized losses on securities													(115	)								(115	)
	Minimum pension liability adjustment													(45	)								(45	)
Total comprehensive income																							3,154
Dividends declared											(1,436	)											(1,436	)
Share issuances for employee benefit plans			2								(45	)					77						32
Purchase of treasury stock			(70	)													(3,120	)					(3,120	)
Purchase of stock by grantor trust																	(3	)					(3	)
Tax benefit related to stock options								5															5
ESOP activities and related tax benefit											10									63			73
Balance at December 31, 1999		2,020	(138	)	$	2,020	$	6,771		$	11,456		$	(358	)	$	(4,798	)	$	(276	)	$	14,815
Net income											4,220												4,220
Other comprehensive income, net of tax:
	Foreign currency translation adjustment													50									50
	Unrealized losses on securities(b)													(169	)								(169	)
	Minimum pension liability adjustment													(11	)								(11	)
Total comprehensive income																							4,090
Dividends declared											(1,424	)											(1,424	)
Share issuances for employee benefit plans			9					(35	)		(187	)					355						133
Purchase of treasury stock			(19	)													(779	)					(779	)
Tax benefit related to stock options								4															4
ESOP activities and related tax benefit											9									64			73
Balance at December 31, 2000		2,020	(148	)	$	2,020	$	6,740		$	14,074		$	(488	)	$	(5,222	)	$	(212	)	$	16,912

(a)

Trust and treasury shares are not considered to be outstanding for financial reporting purposes. As of December 31, 2000, there were approximately 36 shares held in trust and 112 shares held in treasury.

(b)

Net unrealized losses include adjustments for realized gains of $17.

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

NOTE A—ACCOUNTING POLICIES

In this report, BellSouth Corporation and it subsidiaries are referred to as "we" or "BellSouth".

ORGANIZATION

We are an international telecommunications company headquartered in Atlanta, Georgia. For management purposes, our operations are organized into four reportable segments: wireline communications; domestic wireless; international operations; advertising and publishing; and an "all other businesses" segment.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of BellSouth's wholly-owned subsidiaries and subsidiaries in which we have a controlling financial interest. Investments in businesses which we do not control, but have the ability to exercise significant influence over operations and financial policies, are accounted for using the equity method. We report our results on a calendar-year basis, except for our international operations which we report on a one-month lag basis. All significant intercompany transactions and accounts have been eliminated. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current year's presentation.

USE OF ESTIMATES

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles. Such financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the amounts of revenues and expenses. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Investments with an original maturity of over three months to one year are not considered cash equivalents and are included as temporary cash investments in the consolidated balance sheets. Interest income on cash equivalents, temporary cash investments and other interest-bearing instruments was $313 for 1998, $144 for 1999 and $221 for 2000.

MATERIAL AND SUPPLIES

New and reusable material is carried in inventory, principally at average original cost, except that specific costs are used in the case of large individual items. Non-reusable material is carried at estimated salvage value.

PROPERTY, PLANT AND EQUIPMENT

The investment in property, plant and equipment is stated at original cost. For plant dedicated to providing regulated telecommunications services, depreciation is based on the composite group remaining life method of depreciation and straight-line composite rates determined on the basis of equal life groups of certain categories of telephone plant acquired in a given year. When depreciable telephone plant is disposed of, the original cost less net salvage value is charged to accumulated depreciation. The cost of other property, plant and equipment is depreciated using either straight-line or accelerated methods over the estimated useful lives of the assets. Gains or losses on disposal of other depreciable property, plant and equipment are recognized in the year of disposition as an element of Other income, net.

INTANGIBLE ASSETS

Intangible assets consist primarily of the excess consideration paid over the fair value of net tangible assets acquired in business combinations, and include amounts allocated to acquired licenses and customer lists. These assets are being amortized using the straight-line and accelerated methods over periods of benefit that do not exceed 40 years. Intangible assets also include amounts capitalized for computer software costs, which are amortized over periods of benefit of 3 to 8 years.

The carrying value of intangible assets is periodically reviewed to determine whether such intangibles are fully recoverable from projected net cash flows of the related business unit. Amortization of such intangibles was $135 for 1998, $273 for 1999 and $443 for 2000.

VALUATION OF LONG-LIVED ASSETS

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technological or other industry changes. For assets we intend to hold for use, if the

52

total of the expected future undiscounted cash flows is less than the carrying amount of the asset, we recognize a loss for the difference between the fair value and carrying value of the asset. For assets we intend to dispose of, we recognize a loss for the amount that the estimated fair value, less costs to sell, is less than the carrying value of the assets.

FOREIGN CURRENCY

Assets and liabilities of foreign subsidiaries and equity investees with a functional currency other than U.S. Dollars are translated into U.S. Dollars at exchange rates in effect at the end of the reporting period. Foreign entity revenues and expenses are translated into U.S. Dollars at the average rates that prevailed during the period. The resulting net translation gains and losses are reported as foreign currency translation adjustments in shareholders' equity as a component of accumulated other comprehensive income (loss). Operations in countries with hyperinflationary economies consider the U.S. Dollar the functional currency.

Exchange gains and losses on transactions and equity investments denominated in a currency other than their functional currency are generally included in results of operations as incurred unless the transactions are hedged. See Derivative Financial Instruments below.

DERIVATIVE FINANCIAL INSTRUMENTS

We generally enter into derivative financial instruments only for hedging purposes. Deferral accounting is applied when the derivative reduces the risk of the underlying hedged item effectively as a result of high inverse correlation with the value of the underlying exposure. If a derivative instrument either initially fails or later ceases to meet the criteria for deferral or settlement accounting, any subsequent gains or losses are recognized currently in income.

REVENUE RECOGNITION

Revenues are recognized when earned. Certain revenues derived from local telephone and wireless services are billed monthly in advance and are recognized the following month when services are provided. Print advertising and publishing revenues and related directory costs are recognized upon publication of directories. Revenues derived from other telecommunications services, principally network access, long distance and wireless airtime usage, are recognized monthly as services are provided. Revenues from installation and activation activities are deferred and recognized over the life of the customer relationship which is generally 4 years. Allowances for uncollectible billed services are adjusted monthly. The provision for such uncollectible accounts was $334 for 1998, $365 for 1999 and $372 for 2000.

MAINTENANCE AND REPAIRS

The cost of maintenance and repairs of plant, including the cost of replacing minor items not resulting in substantial betterments, is charged to operating expenses.

ADVERTISING

We expense advertising costs as they are incurred. Our total advertising expense was $509 for 1998, $539 for 1999 and $460 for 2000.

INCOME TAXES

The consolidated balance sheets reflect deferred tax balances associated with the anticipated tax impact of future income or deductions implicit in the consolidated balance sheets in the form of temporary differences. Temporary differences primarily result from the use of accelerated methods and shorter lives in computing depreciation for tax purposes.

For financial reporting purposes, we are amortizing deferred investment tax credits earned prior to the 1986 repeal of the investment tax credit and also some transitional credits earned after the repeal. The credits are being amortized as a reduction to the provision for income taxes over the estimated useful lives of the assets to which the credits relate.

EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted-average number of common shares outstanding during each year. Diluted earnings per share is based on the weighted-average number of common shares outstanding plus net incremental shares arising out of employee stock options and benefit plans. The following is a reconciliation of the

53

weighted-average share amounts (in millions) used in calculating earnings per share:

	1998	1999	2000
Basic common shares outstanding	1,970	1,898	1,876
Incremental shares from stock options	14	18	15
Diluted common shares outstanding	1,984	1,916	1,891

The earnings amounts used for per-share calculations are the same for both the basic and diluted methods.

ADOPTION OF NEW ACCOUNTING STANDARDS

Revenue Recognition

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 (SAB 101) which provides guidance on revenue recognition. SAB 101 is effective for fiscal years beginning after December 15, 1999. During 2000 and prior years, consistent with industry practice, we recognized telecommunications service activation fees and certain related costs at the time of service initiation. Based on guidance in SAB 101, we changed our accounting policies, effectively deferring the recognition of revenue and certain related costs associated with new service activation over the life of the customer relationship. Costs are deferred only to the extent that revenue is deferred.

We accounted for SAB 101 as a change in accounting principle effective January 1, 2000, and therefore have not restated prior year financial statements. The net effect of adoption resulted in deferring $1,426 in revenues and certain related costs related to activation services provided prior to January 1, 2000. These revenues and costs are to be recognized over a period of approximately 4 years. Because an equal amount of revenue and expense was deferred, there was no impact on net income for the change in accounting principle. This resulted in a net reduction in revenues and expenses during 2000 of $204. The net reduction of $204 is comprised of current deferrals of $785 and recognition of $581 of previously deferred amounts.

In accordance with the provisions for adoption of SAB 101, we have restated our quarterly information in note Q to apply the provisions to all 2000 periods.

Capitalization of Internal-Use Software Costs

In the first quarter of 1999, we adopted a new accounting standard (SOP 98-1) related to the capitalization of certain costs for internal-use software development. Adoption of the new standard caused an increase in earnings as a result of the capitalization of costs that had previously been expensed. The impacts on income before income taxes, net income and earnings per share were as follows:

	1999		2000
Income before income taxes	$	452	$	518
Net income	$	285	$	322
Earnings per share	$	.15	$	.17

The adoption also changed the classification of these expenditures in the consolidated statements of cash flows from operating to investing activities.

RECENT ACCOUNTING PRONOUNCEMENTS

Derivative Instruments and Hedging Activities

Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" requires that entities recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Gains and losses resulting from changes in the fair values of those derivatives are to be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. We adopted SFAS No. 133 on January 1, 2001; the impact of the adoption was not material to our financial condition or results of operations.

NOTE B—INVESTMENTS AND ADVANCES

We hold investments in various domestic and international partnerships and ventures which are accounted for under the equity method. We also hold investments in equity securities which are accounted for

54

under the cost method. Investments and advances at December 31 consists of the following:

	1999		2000
Investments accounted for under the equity method:
AB Cellular	$	1,681	$	1,894
Cingular Wireless (Cingular)		—		348
Other		257		259
		1,938		2,501
Investments accounted for under the cost method		3,469		3,496
Advances to and notes receivable from affiliates		690		5,013
Investments and Advances	$	6,097	$	11,010

EQUITY METHOD INVESTMENTS

Ownership in equity investments at December 31 is as follows:

	1999	2000
AB Cellular (U.S.)(1)	44.4%	100.0%
Abiatar (Uruguay)	46.0%	46.0%
BellSouth Guatemala(2)	60.0%	60.0%
BellSouth Nicaragua(3)	49.0%	—
BellSouth Panama	43.7%	43.7%
BCP—São Paulo (Brazil)	44.5%	44.5%
BSE—Northeast (Brazil)	46.8%	46.8%
Cellcom (Israel)	34.8%	34.8%
Cingular Wireless (U.S.)(4)	—	40.0%
E-Plus (Germany)	22.5%	22.5%
OESP Midia (Brazil)	40.0%	40.0%
Sonofon (Denmark)	46.5%	46.5%
Skycell (India)	24.5%	24.5%

(1)

We redeemed AT&T from AB Cellular in December 2000. In January 2001, we then contributed our remaining investment to Cingular. This investment was accounted for under the equity method since our control was temporary. See note C for further discussion.

(2)

This investment is accounted for under the equity method due to the existence of significant minority rights that limit our ability to exercise unilateral control over the operation.

(3)

After a change of law in Nicaragua in December 1999, we increased our 49% ownership interest to an 89% controlling stake in the Nicaraguan wireless operations. Accordingly, in first quarter 2000, the results of the Nicaraguan operations, which were previously reported under the equity method, were changed to the consolidation method.

(4)

Cingular was created in October 2000 as a joint venture between BellSouth and SBC Communications. We share joint control of Cingular with SBC Communications. See note C for further discussion.

SUMMARY FINANCIAL INFORMATION OF EQUITY INVESTEES

A summary of combined financial information as reported by our equity investees is set forth below:

	1999		2000
Balance Sheet Information:
Current assets	$	2,634	$	5,118
Noncurrent assets	$	8,625	$	31,623
Current liabilities	$	1,524	$	16,757
Noncurrent liabilities	$	5,946	$	16,185

	1998			1999			2000
Income Statement Information:
Revenues	$	3,766		$	5,326		$	9,188
Operating Income	$	188		$	433		$	906
Net (Loss) Income	$	(116	)	$	(638	)	$	1,201

Brazil Devaluation

In January 1999, the Brazilian Government changed its foreign exchange policy, extinguishing the exchange band through which it had managed the range of the fluctuation of the Real in relation to the U.S. Dollar, allowing the market to freely determine the exchange rate. As a consequence of this change, the Real devalued significantly in relation to the U.S. Dollar in early 1999. The devaluation and subsequent fluctuations in the exchange rate resulted in our Brazilian wireless properties recording net currency losses related to their net U.S. Dollar-denominated liabilities. Our share of the foreign currency losses was $308 for 1999 and $73 for 2000.

COST METHOD INVESTMENTS

We have investments in marketable securities, primarily common stocks, which are accounted for under the cost method. These investments are comprised primarily of an approximate 5% equity interest in Qwest Communications International Inc. and are classified as available-for-sale under SFAS 115. Under SFAS 115, available-for-sale securities are required to be carried at their fair value, with unrealized gains and losses, net of income taxes, recorded in accumulated other comprehensive income (loss) in our statement of changes in shareholders' equity and comprehensive

55

income. The fair values of our investments in marketable securities are determined based on market quotations. The table below shows certain summarized information related to these investments at December 31, 1999 and 2000:

1999		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investment in Qwest		$	3,500	$	—	$	318	$	3,182
Other investments			157		130		—		287
	Total	$	3,657	$	130	$	318	$	3,469

2000	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investment in Qwest	$	3,500	$	—	$	472	$	3,028
Other investments		484		81		97		468
Total	$	3,984	$	81	$	569	$	3,496

In January 2001, we sold a portion of our investment in Qwest. See note R for additional information.

ADVANCES AND NOTES RECEIVABLE

In addition to our equity investments, we have made advances to several of our equity affiliates. Included in our consolidated balance sheet at December 31, 2000 are advances totaling $3,842 to our former domestic wireless operations which were contributed to Cingular. These advances carry an interest rate of 7.5%. Repayment of these borrowings is contingent upon Cingular's ability to raise capital for repayment. Cingular also owes us $103 at December 31, 2000, which represents current receivables, and is included in other current assets. We have also made advances to KPN totaling $443, as discussed in note C. In addition, we have made advances to our partnerships in Brazil and Israel that bear interest varying at rates based on LIBOR, mature between 2004 and 2006 and totaled $433 at December 31, 1999 and $398 at December 31, 2000.

We have noncontrolling financial interests ranging from 70% to 80% in the CSL Ventures and 1155 Peachtree Associates real estate partnerships. We have notes receivable from and advances to these partnerships totaling $161 at December 31, 1999 and 2000. The notes bear interest at rates ranging from 6.31% to 7.88% while the advances bear interest at the federal funds rate plus .30%. Principal amounts outstanding at December 31, 2000 are due and payable to us between November 14, 2001 and January 15, 2038. The instruments require periodic payments of interest and are collateralized by various real estate holdings.

During 1998, we recorded additional income of $102, or $62 after tax, as a result of the payment to us of contingent interest and prepayment penalties associated with an advance to an affiliate.

NOTE C—PARTNERSHIPS, ACQUISITIONS AND
DIVESTITURES

We have completed various transactions to further our strategy of expanding our core operations and divested of interests that no longer meet our strategic objectives. A summary of significant transactions follows:

DOMESTIC WIRELESS

Buyout of PCS Partnerships

In September 2000, we acquired the remaining 44.2% interest in the Carolinas PCS partnership bringing our ownership interest to 100%. The partnership provides PCS service in North Carolina, South Carolina and northeast Georgia. The purchase price of $885 was funded through the issuance of commercial paper. The PCS property and related debt was subsequently contributed to Cingular, which is described below.

Cingular

In October 2000, we combined our domestic wireless voice and data businesses with those of SBC Communications in a joint venture. The venture, Cingular, is owned 40% by BellSouth and 60% by SBC Communications but is jointly controlled. The investment in Cingular is accounted for under the equity method; accordingly, we include our proportionate share of Cingular's earnings as Net earnings (losses) of equity affiliates in our consolidated income statement.

56

We contributed the following amounts to Cingular during 2000:

Current assets	$	675
Noncurrent assets		4,655
Total assets	$	5,330
Current liabilities	$	1,637
Noncurrent liabilities		3,396
Total liabilities	$	5,033
Net assets contributed	$	297

Redemption of AT&T from AB Cellular Partnership

In December 2000, we exercised our option to redeem AT&T's 55.6% partnership interest in AB Cellular Holding, LLC (AB Cellular) as part of a venture agreement with AT&T Wireless Services, by distributing to AT&T the Los Angeles area cellular business. This transaction was accounted for as a non pro rata distribution, and accordingly was accounted for at fair value. As a result of this transaction we reported a pre-tax gain of $479, which is included in Net earnings (losses) of equity affiliates. The overall net income impact of this gain was $292. Our recorded gain represented 44.4% of the excess of the fair value of the Los Angeles net assets over the book value of those assets.

As of December 31, 2000, BellSouth held the remaining assets of the AB Cellular partnership. These assets included 100% of the Houston-area cellular market; 87.35% of the Galveston, Texas-area market; and approximately $1.1 billion in cash. In early January 2001, we contributed our interests in these investments, including the cash, to Cingular. The total book value of the contribution approximated $1.7 billion. Subsequent to the contribution of our remaining AB Cellular investment, our book investment exceeded our proportionate share of the net assets of Cingular by approximately $126. This excess is being amortized using the straight-line method over the average remaining lives of the underlying intangible assets.

INTERNATIONAL OPERATIONS

1998

We purchased additional ownership interests in existing wireless operations in Brazil, Ecuador and Venezuela for approximately $475.

1999

We invested $20 in a venture in Guatemala that won rights to three PCS licenses which cover a substantial portion of the country.

We also raised our ownership interest in our Peruvian communications company through a series of transactions totaling $238, increasing our ownership from 59% to 97%.

2000

E-Plus restructuring

In February 2000, we closed on a previously announced alliance with KPN Royal Dutch Telecom. We utilized our right of first refusal which enabled KPN to acquire a 77.5 percent interest in E-Plus and allows us the option after 18 months of converting our 22.5 percent interest in E-Plus into either 200 million shares of KPN or shares representing at the time an estimated 33.3 percent ownership interest in KPN's wireless subsidiary.

As a result of this transaction, we recognized income of $143, or $68 after tax. The gain relates to a settlement payment from the selling shareholder regarding a dispute over the terms of the E-Plus shareholder agreement governing the provisions of the sale.

As part of this transaction, we also agreed to make up to $3 billion of loans available to KPN to be used for further wireless investments in Europe and received non-detachable warrants to purchase approximately 90 million additional shares of KPN. Our commitment to lend expires and all loans made under the commitment must be repaid on March 1, 2004. We loaned approximately $443 to KPN during 2000, reducing our commitment to lend to KPN to $2.56 billion. KPN applied the proceeds towards the purchase of new third generation wireless licenses from the German government for use by our German operations. We also guaranteed $1.35 billion in bank loans to our German operations, the proceeds of which were also applied towards the purchase of the new licenses, bringing the bank loans to our German operations that we have guaranteed to $1.827 billion. In December 2000, KPN agreed not to make any further draws against our lending commitment prior to January 2003 unless the draws are used to repay loans we have made to KPN or to our German operations, or unless all such loans

57

have already been repaid. The loan to KPN is included in Investments and Advances in our consolidated balance sheet at December 31, 2000.

TCO purchase

In May 2000, we completed the purchase of a combination of voting common stock and American Depository Receipts representing nonvoting preferred stock of Tele Centro Oeste Celular Participacoes SA (TCO), a Brazilian company, for a total purchase price of approximately $240. Tele Centro Oeste provides cellular service in central-west Brazil, including Brasilia, as well as northern Brazil. The common stock portion of the investment represents 11.8% of the voting power of Tele Centro Oeste. The combined investment in common and preferred stock represents 17.3% of the total capital of Tele Centro Oeste. This investment is accounted for under the cost method, subject to the guidelines of available-for-sale securities under SFAS 115.

Colombia

In June 2000, we acquired a 50.4% controlling equity interest in Celumóvil S.A. for a purchase price of approximately $399, funded by $299 of cash and $100 note payable due December 2000. We have commenced cobranding Celumóvil with the BellSouth brand. Celumóvil/BellSouth provides wireless service in the Eastern region of Colombia, which includes the capital city of Bogota, and in the Atlantic or coastal region.

In July 2000, Celumóvil/BellSouth acquired 100% of Cocelco, a wireless operator that since 1984 has been serving the Western region of Colombia, which includes the cities of Medellin and Cali. This acquisition was funded by a $384 capital contribution and a $30 shareholder loan from BellSouth. This transaction increased BellSouth's ownership interest in Celumóvil to approximately 66.0%.

In conjunction with the Colombian transactions, we have entered into a series of put and call agreements whereby we can acquire, or be compelled to acquire, additional shares of Celumóvil from our primary partner in Celumóvil, up to our partner's entire interest, at or close to an appraised fair value between the second and ninth anniversary of our June 2000 acquisition of our initial interest in Celumóvil. Our partner's first put option for up to a number of shares currently equal to approximately 14% of Celumóvil's outstanding stock is first exercisable in June 2002. Our first call option for up to a number of shares currently equal to approximately 9% of Celumóvil's outstanding stock is first exercisable in December 2003.

In all transactions, the excess of the respective purchase price over the net book value of the assets acquired was allocated to customer lists, wireless licenses or goodwill. The excess consideration paid over net assets acquired, along with other intangible assets, is being amortized using either straight-line or accelerated methods over periods of benefit, which do not exceed 40 years.

ADVERTISING AND PUBLISHING

During 1999, we acquired a non-controlling 40% interest in OESP Midia Ltda., a directory publishing business in Brazil for approximately $23. This investment is accounted for using the equity method. In addition, we acquired 100% of Listel-Listas Telefonicas, a directory publishing business in Brazil, for total consideration of approximately $115. This business is accounted for using the consolidation method.

For both transactions, the excess of the respective purchase price over the net book value of the assets acquired was assigned to goodwill, and is being amortized over 15 years using the straight-line method.

WIRELESS DATA

During 1998, we completed a transaction which increased our ownership interest in our U.S. mobile data operations to 90% and our UK mobile data operations to 100%. During 2000, we sold the UK operations (see discussion below) and contributed the U.S. mobile data operations to Cingular.

DIVESTITURES

1998

We sold our 65% ownership interest in BellSouth New Zealand to Vodafone Group Plc for total proceeds of $254. The pretax gain on the sale was $180, or $110 after tax.

We received $155 of additional proceeds from the 1997 sale of our interest in ITT World Directories. The pretax gain from the proceeds was $155, or $96 after tax.

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1999

We sold our 100% interest in Honolulu Cellular to AT&T for total proceeds of $194. The pretax gain on the sale was $39, or $23 after tax.

We sold our 100% interest in a wireless property located in Dothan, Alabama for total proceeds of $21. The pretax gain on the sale was $16, or $10 after tax.

2000

In July 2000, we sold our ownership interests in mobile data operations in Belgium, the Netherlands and the United Kingdom for total proceeds of $28. These sales generated a pre-tax net loss of $14 and a $30 after-tax gain resulting from tax benefits associated with the sale of the operations in the United Kingdom.

NOTE D—BALANCE SHEET INFORMATION

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows at December 31:

	Estimated Depreciable Lives (In Years)	1999		2000
Outside plant	12—20	$	23,325	$	24,483
Central office equipment	8—10		21,302		23,428
Operating and other equipment	5—15		6,676		4,772
Building and building improvements	25—45		4,866		3,783
Furniture and fixtures	10—15		2,995		2,517
Station equipment	6		606		667
Land	—		226		228
Plant under construction	—		1,013		1,034
			61,009		60,912
Less: Accumulated depreciation			36,378		36,755
Property, Plant and Equipment, net		$	24,631	$	24,157

Due to the formation of Cingular, as discussed in note C, property, plant and equipment no longer includes fixed assets of our domestic wireless businesses. At December 31, 1999, domestic wireless fixed assets were $2,406 net of accumulated depreciation of $2,193.

Asset Impairment Loss

In June 1999, we executed a contract with Ericsson to replace infrastructure equipment, including switches, base stations and software, in 14 wireless markets in the southeastern United States. The new equipment is intended to improve network performance and to lay the foundation for migration of the network to Third Generation wireless and wireless Internet. The conversion was substantially completed during 2000.

The planned disposals of the existing infrastructure equipment required an evaluation of asset impairment in accordance with SFAS 121. As a result, a non-cash charge of $320, or $187 after tax, was recorded in the second quarter of 1999 to write these assets down to their fair market value, which was estimated by discounting the expected future cash flows of these assets through the date of disposal. These assets remained in use until the conversion process was completed and we depreciated the remaining net book value over this period.

In December 2000, we recorded a pretax, non-cash charge of $30, or $21 after tax, for the impairment of certain assets associated with our international wireless roaming business. This impairment is a result of continuing losses and our decision to wind down this business.

DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets are summarized as follows at December 31:

	1999		2000
Deferred activation and installation expenses	$	—	$	1,630
Prepaid pension and postretirement benefits		878		1,775
Other		686		775
Deferred charges and other assets	$	1,564	$	4,180

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NOTE D—BALANCE SHEET INFORMATION (Continued)

INTANGIBLE ASSETS

Intangible assets are summarized as follows at December 31:

	Estimated Amortizable Lives (In Years)	1999			2000
Goodwill	15—40	$	1,044		$	1,855
Licenses and concessions	10—40		2,431			1,646
Capitalized software	3—8		748			1,240
Customer lists	3—6		291			402
			4,514			5,143
Less: Accumulated amortization			(740	)		(971	)
Intangible Assets, net		$	3,774		$	4,172

At December 31, 1999, domestic wireless intangible assets totaled $1,505, net of accumulated amortization of $323.

OTHER CURRENT LIABILITIES

Other current liabilities are summarized as follows at December 31:

	1999		2000
Advanced billing and customer deposits	$	944	$	850
Interest and rents accrued		379		489
Dividends payable		364		362
Salaries and wages payable		383		337
Taxes accrued		772		333
Compensated absences		263		267
Restructuring and severance expenses		—		236
Deferred taxes		193		—
Other		483		594
Other Current Liabilities	$	3,781	$	3,468

The restructuring expenses relate to our announced plan for our video entertainment services. See note N for further discussion of this matter.

OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities are summarized as follows at December 31:

	1999		2000
Deferred installation and activation revenues	$	—	$	1,630
Deferred credits		798		817
Postretirement benefits other than pensions		697		744
Compensation related		625		623
Minority interests		391		368
Postemployment benefits		286		265
Accrued pension cost		296		65
Other		206		188
Other noncurrent liabilities	$	3,299	$	4,700

NOTE E—DEBT

DEBT MATURING WITHIN ONE YEAR

Debt maturing within one year is summarized as follows at December 31:

	1999		2000
Short-term notes payable:
Bank loans	$	258	$	1,129
Commercial paper		6,896		5,730
Current maturities of long- term debt		499		710
Debt maturing within one year	$	7,653	$	7,569
Weighted-average interest rate at end of period:
Bank loans		7.41%		9.44%
Commercial Paper		5.90%		6.51%

We have committed credit lines with various banks aggregating $3,141 at December 31, 1999 and $3,325 at December 31, 2000. Borrowings under the committed credit lines totaled $587 at December 31, 1999 and $588 at December 31, 2000. We also maintain uncommitted lines of credit aggregating $580 at December 31, 1999 and $807 at December 31, 2000. Borrowings under the uncommitted lines of credit totaled $149 at December 31, 1999 and $202 at December 31, 2000. There are no significant commitment fees or requirements for compensating balances associated with any lines of credit.

LONG-TERM DEBT

Long-term debt, summarized below, consists primarily of debentures and notes issued by BellSouth Telecommunications, Inc. (BST). Debt issued by BellSouth Capital Funding Corporation was used to finance the businesses of BellSouth Enterprises and the unregulated subsidiaries of BST. During 2000, we merged BellSouth Capital Funding into BellSouth Corporation, and in the future we will issue debt for all of our businesses directly from BellSouth Corporation. We have guaranteed BST's debt securities and BST has ceased its separate reporting with the SEC, as permitted by the SEC's rules. Interest rates and maturities in the table below are for the amounts outstanding at December 31:

		1999		2000
Issued by BellSouth Telecommunications, Inc.
4.38%—6%	2001—2045	$	1,495	$	1,182
6.13%—7%	2001—2033		3,207		4,720
7.5%—8.25%	2032—2035		1,150		1,150
6.65%—7%	2095		665		676
			6,517		7,728

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		1999			2000
Issued by BellSouth Capital Funding Corporation
5.38%—7.38%	2002—2039		1,317			1,317
7.75%—7.88%	2010—2030		—			2,000
7.12%	2097		500			500
Guarantee of ESOP debt
9.13%—9.19%			391			307
Other			933			1,391
Unamortized discount, net of premium			(46	)		(70	)
			9,612			13,173
Current maturities			(499	)		(710	)
Long-term debt		$	9,113		$	12,463

Maturities of long-term debt outstanding, in principal amounts, at December 31, 2000 are summarized below. Maturities after the year 2005 include $500 principal amount of 6.65% Debentures due in 2095. At December 31, 2000, such debentures had an accreted book value of $176.

Maturities
2001	$	710
2002		2,129
2003		867
2004		481
2005		650
Thereafter		8,730
Total	$	13,567

In 1998, BST issued $500 of 6% Reset Put Securities (REPS) due June 15, 2012. REPS are a debt instrument with embedded put and call option features. The REPS are subject to mandatory redemption from the existing holders on June 15, 2002 through either (i) the exercise by the callholder of its right to purchase the REPS or (ii) the repurchase of the REPS by BST. If the call option is exercised, the callholder will, based on BST's then current credit spreads, determine the interest to be paid on the REPS.

In February 2000 we issued $2 billion of long-term debt, consisting of $1 billion of Ten-year, 7³/4% Notes and $1 billion of Thirty-year, 7⁷/8% Debentures. We received total proceeds of $1,974, which were used to retire commercial paper.

In December 2000 BST issued $1.8 billion of notes and received total proceeds of $1,796, which were used to retire commercial paper. The notes bear interest at the three-month LIBOR, plus or minus a spread ranging from minus 0.02% to plus 0.06%. The initial maturity of these notes in January 2002 may be extended in thirteen-month increments by the holders of the notes but will not extend later than January 2006.

At December 31, 2000, we had a shelf registration statement on file with the Securities and Exchange Commission under which $1.2 billion of debt securities could be publicly offered.

NOTE F—SHAREHOLDERS' EQUITY

AMENDMENT TO CHARTER

In December 2000, our shareholders adopted articles of amendment to our charter. The articles of amendment increased the number of shares of common stock authorized to be issued from 4,400,000,000 to 8,650,000,000. The articles of amendment also permit us to issue our common stock in series.

STOCK SPLIT

In November 1998, our Board of Directors approved a two-for-one stock split effected in the form of a stock dividend. Each shareholder of record received one additional share of common stock for each share owned as of the record date. As a result of the split, 1,010,156,851 shares were issued and $1,010 was transferred from paid-in capital to common stock.

PREFERRED STOCK AUTHORIZED

Our articles of incorporation authorize 100 million shares of cumulative first preferred stock having a par value of $1 per share, of which 30 million shares have been reserved and designated series B for possible issuance under a shareholder rights plan. As of December 31, 2000, no preferred shares had been issued. The series A first preferred stock was created for a previous shareholder rights plan which has expired.

SHAREHOLDER RIGHTS PLAN

In 1999, we adopted a shareholder rights plan by declaring a dividend of one right for each share of common stock then outstanding and to be issued thereafter. Each right entitles shareholders to buy one one-thousandth of a share of series B first preferred stock for $200.00 per share. The rights may be exercised only if a person or group acquires 10% of the common stock of BellSouth without the prior approval of the Board of Directors or announces a tender or exchange offer that would result in ownership of 10% or more of the common stock. If a person or group

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acquires 10% of BellSouth's stock without prior Board approval, other shareholders are then allowed to purchase BellSouth common stock, or units of preferred stock with the same voting and economic characteristics, at half price. The rights currently trade with BellSouth common stock and may be redeemed by the Board of Directors for one cent per right until they become exercisable, and thereafter under certain circumstances. The rights expire in December 2009.

SHARES HELD IN TRUST AND TREASURY

During 1996 and 1997, we issued shares to grantor trusts to provide partial funding for the benefits payable under certain nonqualified benefit plans. The trusts are irrevocable, and assets contributed to the trusts can only be used to pay such benefits with certain exceptions. At December 31, 1999 and 2000, the assets held in the trusts consist of cash and 35.7 million shares of BellSouth common stock. Of the total shares of BellSouth common stock held by the trusts, 31.9 million were issued directly from us to the trusts out of previously unissued shares and 3.8 million shares were acquired in open market transactions through use of the trusts' funds.

The total cost of the shares issued by us as of the date of funding the trusts is included in common stock and paid-in capital; however, because these shares are not considered outstanding for financial reporting purposes, the shares are included within shares held in trust and treasury, a reduction to shareholders' equity. In addition, there is no earnings per share impact of these shares. The cost of shares acquired in open market purchases by the trusts are also included in shares held in trust and treasury.

In addition to shares held by the grantor trusts, shares held in trust and treasury includes treasury shares. We purchase treasury shares when we consider market and other conditions to be favorable. In 1999, we purchased 69.7 million shares for an aggregate of $3,120. During 2000, we purchased 19.1 million shares for an aggregate of $779. We have reissued a total of 1.9 million shares in 1999 and 8.7 million shares in 2000 under various employee benefit plans and for other purposes.

Shares held in trust and treasury, at cost, as of December 31, 1999 and 2000 are comprised of the following:

	1999
	Shares	Amount
Shares held by grantor trusts	35,653,926	$	560
Shares held in treasury	102,113,220		4,238
Shares held in trust and treasury	137,767,146	$	4,798

	2000
	Shares	Amount
Shares held by grantor trusts	35,653,926	$	560
Shares held in treasury	112,521,368		4,662
Shares held in trust and treasury	148,175,294	$	5,222

GUARANTEE OF ESOP DEBT

The amount equivalent to the guarantee of the amortizing notes issued by our ESOP trusts is presented as a reduction to shareholders' equity. The amount recorded as a decrease in shareholders' equity represents the cost of unallocated BellSouth common stock purchased with the proceeds of the amortizing notes and the timing difference resulting from the shares allocated accounting method. See note G for further information.

NOTE G—EMPLOYEE BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Substantially all of our nonrepresented and represented employees are covered by noncontributory defined benefit pension plans, as well as postretirement health and life insurance welfare plans.

The pension plan covering nonrepresented employees is a cash balance plan, which provides pension benefits determined by a combination of compensation-based service and additional credits and individual account-based interest credits. The 1999 and 2000 projected benefit obligations assume interest and additional credits greater than the minimum levels specified in the written plan. Pension benefits provided for represented employees are based on specified benefit amounts and years of service through 1998. During 1998, we established a cash balance plan for

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represented employees based upon an initial cash balance amount, negotiated pension band increases and interest credits effective January 1, 1999. The cash balance plan is subject to a minimum benefit determined under a plan in existence for represented employees who were participants prior to January 1, 1999 and who are eligible to retire. The 1999 and 2000 represented pension obligations include the projected effect of future bargained-for improvements. The accounting for the nonrepresented health care plan anticipates certain cost-sharing adjustments for employees who retire after December 31, 1991. The adjustments consider past practice but are not provided for in the written plan.

The following tables summarize benefit costs, as well as the assumptions, the benefit obligations, changes in plan assets and funded status at or for the year ended December 31:

Pension Benefits

	1999			2000
Change in benefit obligation:
Benefit obligation at the beginning of the year	$	13,504		$	12,960
Service cost		185			188
Interest cost		911			918
Amendments		(13	)		(338	)
Actuarial (gain) loss		(735	)		296
Benefits and lump sums paid		(892	)		(1,760	)
Benefit obligation at the end of the year	$	12,960		$	12,264
Change in plan assets:
Fair value of plan assets at beginning of the year	$	17,983		$	20,563
Actual return on plan assets		3,472			603
Benefits and lump sums paid		(892	)		(1,760	)
Fair value of plan assets at the end of year	$	20,563		$	19,406
Funded status:
As of end of year	$	7,603		$	7,142
Unrecognized prior service cost		326			(37	)
Unrecognized net gain		(7,383	)		(5,493	)
Unrecognized net asset		(68	)		(44	)
Prepaid pension cost	$	478		$	1,568
Amounts recognized in the consolidated balance sheets at December 31:
Prepaid pension cost	$	774		$	1,633
Accrued pension liability		(296	)		(65	)
Net amount recognized	$	478		$	1,568

	1998			1999			2000
Components of net pension cost:
Service cost	$	273		$	185		$	188
Interest cost		841			911			918
Expected return on plan assets		(1,209	)		(1,449	)		(1,537	)
Amortization of prior service cost		(40	)		40			26
Amortization of actuarial gain		(103	)		(87	)		(267	)
Amortization of transition asset		(21	)		(21	)		(21	)
Net pension benefit	$	(259	)	$	(421	)	$	(693	)
Weighted-average assumptions used in developing pension information include:
Discount rate		6.75%			7.75%			7.75%
Expected return on plan assets		8.25%			9.00%			9.00%
Rate of compensation increase		5.10%			5.20%			5.30%

Retiree Health and Life

	1999			2000
Change in benefit obligation:
Benefit obligation at the beginning of the year	$	4,690		$	4,933
Service cost		45			56
Interest cost		273			399
Amendments		195			(15	)
Actuarial loss		1			673
Benefits and lump sums paid		(271	)		(304	)
Special termination benefits		—			8
Benefit obligation at the end of the year	$	4,933		$	5,750
Change in plan assets:
Fair value of plan assets at beginning of the year	$	2,845		$	3,421
Actual return (loss) on plan assets		478			(64	)
Employer contribution		357			376
Plan participants' contributions		11			15
Benefits and lump sums paid		(270	)		(303	)
Fair value of plan assets at the end of year	$	3,421		$	3,445
Funded status:
As of end of year	$	(1,512	)	$	(2,305	)
Unrecognized prior service cost		305			203
Unrecognized net (gain) loss		(44	)		924
Unrecognized net obligation		658			576
Accrued benefit cost	$	(593	)	$	(602	)
Amounts recognized in the consolidated balance sheets at December 31:
Prepaid benefit cost	$	104		$	142
Accrued benefit liability		(697	)		(744	)
Net amount recognized	$	(593	)	$	(602	)

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NOTE G—EMPLOYEE BENEFIT PLANS (Continued)

	1998			1999			2000
Components of net other postretirement benefit cost:
Service cost	$	34		$	45		$	56
Interest cost		263			273			399
Expected return on plan assets		(167	)		(207	)		(270	)
Amortization of prior service cost		35			52			86
Amortization of actuarial (gain) loss		(4	)		2			25
Amortization of transition obligation		82			82			82
Net postretirement benefit cost	$	243		$	247		$	378
Weighted-average assumptions used in developing other postretirement information include:
Discount rate		6.75%			7.75%			7.75%
Expected return on assets		7.75%			8.00%			8.25%
Rate of compensation increase		5.10%			4.80%			4.80%
Health care cost trend rate		8.50%			8.00%			9.00%

The health care cost trend rate used to value the accumulated postretirement obligation in 2000 is assumed to decrease to 6.0% by 2006. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one-percentage point change in assumed health care cost trend rates would have the following effects as of December 31, 2000:

	1-Percentage Point Increase		1-Percentage Point Decrease
Effect on total service and interest cost components	$	32	$	(27	)
Effect on other postretirement benefit obligation	$	453	$	(377	)

The change in net pension income and net other postretirement benefit cost is affected by several variables, including asset gains and experience losses; and changes in actuarial assumptions such as discount rate, return on plan assets and health care trend rates.

The consolidated net pension income and other postretirement benefit cost amounts above are exclusive of curtailment and settlement effects. Work force reduction activity resulted in pension curtailment gains of $9 for 1998 and special termination benefits of $8 for 2000. In 2000, lump-sum pension distributions for the represented pension plan surpassed the settlement threshold equal to the sum of the service cost and interest cost components of net periodic pension cost. This resulted in settlement gain recognition of $362 for all cash settlements under the plan.

We also maintain a nonqualified supplemental retirement plan for certain employees. The unfunded accumulated benefit obligations were $279 at December 31, 1999 and $292 at December 31, 2000. An intangible asset of $27 at December 31, 1999 and $9 at December 31, 2000 was recognized pursuant to paragraph 37 of SFAS 87, as was accumulated other comprehensive income, net of deferred taxes, of $45 at December 31, 1999 and $56 at December 31, 2000. The expense associated with this plan was $39 in 1998, $38 in 1999 and $46 in 2000.

DEFINED CONTRIBUTION PLANS

We maintain several contributory savings plans which cover substantially all employees. The BellSouth Retirement Savings Plan and the BellSouth Savings and Security Plan (collectively, the Savings Plans) are tax-qualified defined contribution plans. Assets of the plans are held by two trusts (the Trusts) which, in turn, are part of the BellSouth Master Savings Trust.

In 1990, we incorporated a leveraged Employee Stock Ownership Plan (ESOP) into the Savings Plans. The Trusts borrowed $850 by issuing amortizing notes which are guaranteed by BellSouth. The Trusts used the loan proceeds to purchase shares of BellSouth common stock in the open market. These shares are held in suspense accounts in the Trusts; a scheduled number of shares is released for allocation to participants as each semiannual loan payment is made. The Trusts service the debt with contributions from us and with dividends paid on the shares held by the Trusts. None of the shares held by the Trusts is subject to repurchase.

A portion of employees' eligible contributions to the Savings Plans is matched by us at rates determined annually by the Board of Directors. Our matching obligation is fulfilled with shares released from the suspense accounts semi-annually for allocation to participants. The number of shares allocated to each participant's account is based on the market price of the shares at the time of allocation. If shares released for allocation do not fulfill our matching obligation, we make further contributions to the Trusts to fund the purchase of additional shares in the open market to fulfill the remaining obligation.

We recognize expense using the shares allocated accounting method, which combines the cost of the shares allocated for the period plus interest incurred, reduced by the dividends used to service the ESOP debt. Dividends on all ESOP shares are recorded as a

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reduction to retained earnings, and all ESOP shares are included in the computation of earnings per share.

	1998		1999		2000
Compensation cost	$	46	$	31	$	33
Interest expense	$	28	$	24	$	19
Actual interest on ESOP Notes	$	44	$	37	$	30
Cash contributions, excluding dividends paid to the trusts	$	80	$	73	$	75
Dividends paid to the trusts, used for debt service	$	42	$	43	$	41
Shares allocated to participants (millions)		38.3		43.3		48.3
Shares unallocated (millions)		25.2		20.2		15.2

NOTE H—STOCK COMPENSATION PLANS

At December 31, 2000, we have stock options outstanding under several stock-based compensation plans. The BellSouth Corporation Stock Plan (the Stock Plan) provides for grants to key employees of stock options and various other stock-based awards. One share of BellSouth common stock is the underlying security for any award. The aggregate number of shares of BellSouth common stock which may be granted under the Stock Plan in any calendar year cannot exceed one and a quarter percent of the shares outstanding at the time of grant. Prior to adoption of the Stock Plan, stock options were granted under the BellSouth Corporation Stock Option Plan. Stock options granted under both plans entitle an optionee to purchase shares of BellSouth common stock within prescribed periods at a price either equal to, or in excess of, the fair market value on the date of grant. Options granted under these plans generally become exercisable at the end of three to five years and have a term of 10 years.

We apply APB Opinion 25 and related Interpretations in accounting for our stock plans. Accordingly, no compensation cost has been recognized for grants of stock options. Had compensation cost for our stock-based compensation plans been determined in accordance with the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," our net income and earnings per share would have been changed to the pro forma amounts indicated below:

	1998		1999		2000
Net income—as reported	$	3,527	$	3,448	$	4,220
Net income—pro forma	$	3,488	$	3,379	$	4,118
Basic earnings per share—as reported	$	1.79	$	1.82	$	2.25
Basic earnings per share—pro forma	$	1.77	$	1.78	$	2.20
Diluted earnings per share—as reported	$	1.78	$	1.80	$	2.23
Diluted earnings per share—pro forma	$	1.76	$	1.76	$	2.18

The pro forma amounts reflected above are not likely to be representative of the effects on reported net income in future years because, in general, the number of future shares to be issued under these plans is not known and the assumptions used to determine the fair value can vary significantly.

The following table summarizes the activity for stock options outstanding:

	1998			1999			2000
Options outstanding at January 1		45,122,812			59,202,910			71,699,081
Options granted		17,963,592			15,385,731			23,598,035
Options exercised		(2,784,312	)		(1,839,933	)		(7,792,877	)
Options forfeited		(1,099,182	)		(1,049,627	)		(2,690,189	)
Options outstanding at December 31		59,202,910			71,699,081			84,814,050
Weighted—average option prices per common share:
Outstanding at January 1	$	18.67		$	22.77		$	27.73
Granted at fair market value	$	31.95		$	45.51		$	44.89
Exercised	$	15.35		$	15.74		$	17.46
Forfeited	$	23.47		$	30.22		$	39.58
Outstanding at December 31	$	22.77		$	27.73		$	33.09
Weighted—average fair value of options granted at fair market value during the year	$	7.22		$	11.19		$	13.46
Options exercisable at December 31		14,733,210			19,114,773			33,224,789
Shares available for grant at December 31		19,504,179			18,825,466			39,384,921

The fair value of each option grant is estimated on the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	1998	1999	2000
Expected life (years)	5	5	5
Dividend yield	2.40%	1.67%	1.69%
Expected volatility	21.0%	23.0%	27.0%
Risk-free interest rate	5.42%	4.82%	6.27%

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The following table summarizes information about stock options outstanding at December 31, 2000:

			Outstanding				Exercisable
Exercise Price Range			Options (millions)	Average Life(a)	Average Exercise Price		Options (millions)	Average Exercise Price
$ $	12.10 15.08	-	8.2	3.19	$	14.39	8.2	$	14.39
$ $	15.19 22.19	-	22.7	5.29	$	21.21	17.4	$	21.20
$ $	22.25 30.91	-	14.4	7.07	$	30.67	3.4	$	30.00
$ $	31.11 45.53	-	23.4	8.71	$	43.95	2.9	$	43.60
$ $	45.66 51.78	-	16.1	9.09	$	45.82	1.3	$	45.90
$ $	12.10 51.78	-	84.8	7.05	$	33.09	33.2	$	23.31

^(a)

Average contractual life remaining in years.

NOTE I—INCOME TAXES

The consolidated balance sheets reflect the anticipated tax impact of future taxable income or deductions implicit in the consolidated balance sheets in the form of temporary differences. These temporary differences reflect the difference between the basis in assets and liabilities as measured in the consolidated financial statements and as measured by tax laws using enacted tax rates.

The provision for income taxes is summarized as follows:

		1998			1999			2000
Current
	Federal	$	1,652		$	1,875		$	1,559
	State		234			208			100
	Foreign		34			11			104
		$	1,920		$	2,094		$	1,763
Deferred, net
	Federal	$	221		$	78		$	600
	State		34			5			97
	Foreign		94			71			(25	)
		$	349		$	154		$	672
Investment tax credits, net
	Federal	$	(45	)	$	(41	)	$	(39	)
	Foreign		—			(167	)		(18	)
		$	(45	)	$	(208	)	$	(57	)
Total provision for income taxes		$	2,224		$	2,040		$	2,378

Temporary differences which gave rise to deferred tax assets and (liabilities) at December 31 were as follows:

	1999			2000
Loss carryforwards	$	173		$	366
Foreign inflation adjustment		—			197
Restructuring accrual		—			178
Marketable securities		60			119
Allowance for uncollectibles		83			98
Compensation related		568			94
Regulatory accruals		68			96
Other		116			111
		1,068			1,259
Valuation allowance		(153	)		(592	)
Deferred tax assets	$	915		$	667
Depreciation	$	(2,386	)	$	(2,656	)
Equity investments		(577	)		(696	)
Issue basis accounting		(249	)		(264	)
Licenses		(343	)		(259	)
Other		(124	)		(16	)
Deferred tax liabilities		(3,679	)		(3,891	)
Net deferred tax liability	$	(2,764	)	$	(3,224	)

The valuation allowance, which increased by $58 in 1999 and $439 in 2000, primarily relates to state and foreign net operating losses that may not be utilized during the carryforward period. The increase in 2000 relates primarily to net operating losses in Colombia. The net deferred tax liability at December 31, 1999 included a current balance of $(59) and noncurrent balance of $(2,705). The net deferred tax liability at December 31, 2000 included a current asset balance of $270 and a noncurrent liability balance of $(3,494).

A reconciliation of the federal statutory income tax rate to our effective tax rate follows:

	1998		1999		2000
Federal statutory tax rate	35.0%		35.0%		35.0%
State income taxes, net of federal income tax benefit	3.0		2.5		1.9
Net earnings (losses) of equity affiliates	0.6		2.0		—
Change in valuation allowance	—		—		1.0
Investment tax credits	(0.5	)	(3.5	)	(0.7	)
Other	0.6		1.2		(1.2	)
Effective tax rate	38.7%		37.2%		36.0%

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NOTE I—INCOME TAXES (Continued)

The reduction in our effective tax rate during 1999 was primarily driven by the recognition of investment tax credits by one of our foreign subsidiaries. The credits were claimed by the subsidiary in previous years but were denied by taxing authorities. A reserve was established while the matter was under appeal. During 1999, we received a favorable ruling on our appeal leading to the recognition of the benefit.

The reduction in the 2000 effective tax rate was driven by the impact of additional income related to the restructuring of our ownership in our German wireless operations, the recognition of tax incentives, tax benefits generated by the sale of our international wireless data properties and more favorable results from companies we report on the equity-method, which generally are recorded net of tax benefits or expense.

At December 31, 2000, the deferred tax liability related to approximately $750 of cumulative unrepatriated earnings on combined foreign subsidiaries and equity investments in unconsolidated businesses was excluded under SFAS 109 because such earnings are intended to be reinvested indefinitely. The determination of the deferred tax liability is not practicable at this time.

NOTE J—SUPPLEMENTAL CASH FLOW INFORMATION

	1998		1999		2000
Cash paid for:
Income taxes	$	2,021	$	1,906	$	2,031
Interest	$	838	$	1,013	$	1,242

In 1998, we contributed our ownership interests in the Los Angeles, Houston and Galveston wireless operations to the AB Cellular Partnership. As a result of the transaction, net assets were increased by approximately $300 with a corresponding increase to liabilities.

During 1999, we entered an agreement with Crown Castle International Corporation to sublease portions of our cellular towers. See note N for further discussion of this matter. As consideration for the transaction, we received Crown stock valued at approximately $153 in 1999 and $27 in 2000.

NOTE K—SEGMENT INFORMATION

We have four reportable operating segments: (1) Wireline communications; (2) Domestic wireless; (3) International operations; and (4) Advertising and publishing. We have included the operations of all other businesses falling below the reporting threshold in the "All other businesses" segment. The "Reconciling items" shown below include Corporate Headquarters and capital funding activities, intercompany eliminations and other nonoperating items. During fourth quarter 2000, we contributed our domestic wireless operations to Cingular, and we account for our investment in Cingular under the equity method. For management purposes, however, we evaluate Cingular's results based on our proportionate share. Accordingly, the operating revenues and expenses reported for our domestic wireless segment reflect 40% of Cingular's total revenues and expenses.

The following table provides information for each operating segment:

	1998			1999			2000
Wireline communications
External revenues	$	16,147		$	17,206		$	18,063
Intersegment revenues		221			318			288
Depreciation and amortization		3,363			3,393			3,644
Operating income		4,871			5,828			6,208
Interest expense		551			560			698
Income taxes		1,573			1,971			2,047
Segment net income	$	2,751		$	3,315		$	3,503
Segment assets	$	23,916		$	25,536		$	29,892
Capital expenditures	$	3,512		$	4,638		$	5,285
Domestic wireless
External revenues	$	2,961		$	3,473		$	4,205
Intersegment revenues		7			13			14
Depreciation and amortization		513			656			613
Operating income		374			328			611
Interest expense		84			91			174
Net earnings (losses) of equity affiliates		165			144			145
Income taxes		184			143			204
Segment net income	$	283		$	234		$	357
Segment assets	$	6,540		$	6,097		$	8,133
Equity method investments	$	1,610		$	1,750		$	2,242
Capital expenditures	$	692		$	550		$	320
International operations
External revenues	$	1,995		$	2,289		$	2,771
Intersegment revenues		—			2			39
Depreciation and amortization		357			442			597
Operating income		234			118			45
Interest expense		85			77			169
Interest income		27			57			73
Net earnings (losses) of equity affiliates		(69	)		(2	)		(68	)
Income taxes		119			31			2
Segment net loss	$	(62	)	$	(4	)	$	(170	)
Segment assets	$	4,449		$	4,869		$	7,724
Equity method investments	$	521		$	159		$	213
Capital expenditures	$	710		$	603		$	820

67

Advertising and publishing
External revenues	$	1,891		$	2,010		$	2,178
Intersegment revenues		—			18			22
Depreciation and amortization		25			31			36
Operating income		849			901			1,037
Interest expense		7			8			14
Net earnings (losses) of equity affiliates		(4	)		(5	)		—
Income taxes		317			339			390
Segment net income	$	530		$	556		$	637
Segment assets	$	1,288		$	1,662		$	1,886
Equity method investments	$	—		$	25		$	24
Capital expenditures	$	36		$	35		$	55
All other businesses
External revenues	$	113		$	280		$	425
Intersegment revenues		227			371			413
Depreciation and amortization		94			142			177
Operating loss		(360	)		(320	)		(246	)
Interest expense		26			19			3
Net earnings (losses) of equity affiliates		—			(1	)		(3	)
Income tax benefit		(112	)		(143	)		(106	)
Segment net loss	$	(210	)	$	(215	)	$	(189	)
Segment assets	$	1,273		$	1,380		$	1,554
Equity method investments	$	61		$	4		$	22
Capital expenditures	$	253		$	318		$	238
Reconciling items
External revenues	$	16		$	(34	)	$	(1,491	)
Intersegment revenues		(455	)		(722	)		(776	)
Depreciation and amortization		5			7			(132	)
Provision for restructuring and asset impairments		—			320			606
Operating loss		(64	)		(418	)		(771	)
Interest expense		84			275			270
Interest income		247			66			140
Net earnings (losses) of equity affiliates		—			(305	)		616
Gain (loss) on sale of operations		335			55			(14	)
Income taxes (benefit)		143			(301	)		(159	)
Segment net income (loss)	$	235		$	(438	)	$	82
Segment assets	$	1,944		$	3,909		$	1,736
Equity method investments	$	(44	)	$	—		$	—
Capital expenditures	$	9		$	29		$	277

RECONCILIATION TO CONSOLIDATED FINANCIAL INFORMATION

Operating revenues
Wireline communications	$	16,368		$	17,524		$	18,351
Domestic wireless		2,968			3,486			4,219
International operations		1,995			2,291			2,810
Advertising and publishing		1,891			2,028			2,200
All other businesses		340			651			838
Total Segments		23,562			25,980			28,418
Reconciling items		(439	)		(756	)		(2,267	)
Total consolidated	$	23,123		$	25,224		$	26,151
	1998			1999			2000
Net income
Wireline communications	$	2,751		$	3,315		$	3,503
Domestic wireless		283			234			357
International operations		(62	)		(4	)		(170	)
Advertising and publishing		530			556			637
All other businesses		(210	)		(215	)		(189	)
Total Segments		3,292			3,886			4,138
Reconciling items		235			(438	)		82
Total consolidated	$	3,527		$	3,448		$	4,220
Segment assets
Wireline communications	$	23,916		$	25,536		$	29,892
Domestic wireless		6,540			6,097			8,133
International operations		4,449			4,869			7,724
Advertising and publishing		1,288			1,662			1,886
All other businesses		1,273			1,380			1,554
Total Segments		37,466			39,544			49,189
Reconciling items		1,944			3,909			1,736
Total consolidated	$	39,410		$	43,453		$	50,925

Reconciling items include undistributed corporate expenses, corporate assets, intersegment eliminations and special items. Beginning in 2000, reconciling items also includes amounts to reconcile the proportional results of our domestic wireless segment to GAAP results. For 1998, corporate assets are comprised primarily of cash and cash equivalents. For 1999 and 2000, corporate assets are comprised primarily of our investment in Qwest.

Special items are transactions or events that are included in reported consolidated results but are excluded from segment results due to their nonrecurring or nonoperational nature. These items include severance accruals, provisions for restructuring and asset impairments, foreign currency losses associated with devaluations, gains (losses) on sales of operations, gains on swaps of wireless properties and charges for intellectual property use.

Net revenues to external customers are based on the location of the customer. Geographic information as of December 31, 1998, 1999 and 2000 is as follows:

	United States		International		Total
Year ended December 31, 1998:
Revenues	$	21,128	$	1,995	$	23,123
Long-lived assets		27,082		3,622		30,704
Year ended December 31, 1999:
Revenues	$	22,866	$	2,358	$	25,224
Long-lived assets		32,153		3,913		36,066
Year ended December 31, 2000:
Revenues	$	23,245	$	2,906	$	26,151
Long-lived assets		37,571		5,948		43,519

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NOTE L—FINANCIAL INSTRUMENTS

The recorded amounts of cash and cash equivalents, temporary cash investments, bank loans and commercial paper approximate fair value due to the short-term nature of these instruments. The fair value for BST's long-term debt is estimated based on the closing market prices for each issue at December 31, 1999 and 2000. Fair value estimates for the guarantee of ESOP debt, Capital Funding long-term debt, foreign exchange contracts, foreign currency swaps and interest rate swaps are based on quotes from dealers. Since judgment is required to develop the estimates, the estimated amounts presented herein may not be indicative of the amounts that we could realize in a current market exchange.

Following is a summary of financial instruments where the fair values differ from the recorded amounts as of December 31, 1999 and 2000:

		1999
		Recorded Amount		Estimated Fair Value
Balance sheet financial instruments:
Long-term debt:
	Issued by BST	$	6,517	$	6,112
	Issued by Capital Funding		1,817		1,652
	Guarantee of ESOP debt		391		417
Off-balance sheet financial instruments:
	Interest rate swaps		—		(8	)

		2000
		Recorded Amount		Estimated Fair Value
Balance sheet financial instruments:
Long-term debt:
	Issued by BST	$	7,728	$	7,613
	Issued by Capital Funding		3,817		3,823
	Guarantee of ESOP debt		307		323
Off-balance sheet financial instruments:
	Interest rate swaps		—		(6	)

DERIVATIVE FINANCIAL INSTRUMENTS

We are, from time to time, party to currency swap agreements, interest rate swap agreements and foreign exchange forward contracts in our normal course of business for purposes other than trading. These financial instruments are used to mitigate foreign currency and interest rate risks, although to some extent they expose us to market risks and credit risks. We control the credit risks associated with these instruments through the evaluation and continual monitoring of the creditworthiness of the counterparties. In the event that a counterparty fails to meet the terms of a contract or agreement, our exposure is limited to the current value at that time of the currency rate or interest rate differential, not the full notional or contract amount. We believe that such contracts and agreements have been executed with creditworthy financial institutions. As such, we consider the risk of nonperformance to be remote.

INTEREST RATE SWAPS

We enter into interest rate swap agreements to exchange fixed and variable rate interest payment obligations without the exchange of the underlying principal amounts. We were a party to various interest rate swaps with an aggregate notional amount of $920 at December 31, 1999 and $1,620 at December 31, 2000. The following table summarizes the average rates of these agreements:

		At December 31,
		1999	2000
Pay fixed / receive variable:
	Rate paid	6.10%	6.03%
	Rate received	5.41%	6.67%
Pay variable / receive fixed:
	Rate paid	5.35%	6.42%
	Rate received	6.00%	6.00%

The swaps mature at dates ranging from 2001 to 2005.

OTHER

We have also issued letters of credit and financial guarantees which approximate $2,462 at December 31, 2000. Of this total, $1,827 represents the U.S. Dollar equivalent of the outstanding debt of E-Plus guaranteed by us. We have agreed to guarantee E-Plus borrowings up to 1,996 million Euros at December 31, 2000. Since there is no market for the instruments, it is not practicable to estimate their fair value.

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NOTE M—COMMITMENTS AND CONTINGENCIES

LEASES

We have entered into operating leases for facilities and equipment used in operations. Rental expense under operating leases was $242 for 1998, $297 for 1999 and $314 for 2000. Capital leases currently in effect are not significant.

The following table summarizes the approximate future minimum rentals under noncancelable operating leases in effect at December 31, 2000:

	Minimum Rentals
2001	$	146
2002		136
2003		113
2004		98
2005		88
Thereafter		323
Total	$	904

OUTSIDE PLANT

We currently self-insure all of our outside plant against casualty losses. Such outside plant, located in the nine southeastern states served by BST, is susceptible to damage from severe weather conditions and other perils. The net book value of outside plant was $7,099 at December 31, 1999 and $7,395 at December 31, 2000.

OUTSOURCING CONTRACTS

Beginning in 1997, we contracted with various entities to outsource the performance of certain engineering functions, as well as our information technology operations and application development. These contracts expire at various dates through 2007, are generally renewable, and are cancelable upon the payment of additional fees or for nonperformance. Future minimum payments for these contracts range from $300 to $570 annually over the contract periods.

RECIPROCAL COMPENSATION

Following the enactment of the Telecommunications Act of 1996, our telephone company subsidiary, BST, and various competitive local exchange carriers entered into interconnection agreements providing for, among other things, the payment of reciprocal compensation for local calls initiated by the customers of one carrier that are completed on the network of the other carrier. Numerous competitive local carriers have claimed entitlement from BST for compensation associated with dial-up calls originating on BST's network and connecting with Internet service providers served by the competitive local carriers' networks. BST has maintained that dial-up calls to Internet service providers are not local calls for which terminating compensation is due under the interconnection agreements; however, the courts and state regulatory commissions in BST's operating territory that have considered the matter have, in most cases, ruled that BST is responsible for paying reciprocal compensation on these calls. At December 31, 2000, the exposure related to unrecorded amounts withheld from competitive local carriers was approximately $320, including accrued interest. We have commenced discussions with several competitive local carriers concerning settlement of some claims, and agreements have been reached in certain circumstances.

Other reciprocal compensation issues

In a related matter, a competitive local carrier was claiming terminating compensation of approximately $165 for service arrangements that we did not believe involved "traffic" under our interconnection agreements. We filed a complaint with the state regulatory commission asking that agency to declare that we did not owe reciprocal compensation for these arrangements. In March 2000, the state commission ruled in our favor finding that compensation was not owed to the competitive local carrier. This matter is currently on appeal.

COMPLIANCE MATTERS

Foreign Corrupt Practices Act

In July 2000, the SEC began a formal investigation of whether we and others may have violated the Foreign Corrupt Practices Act. The SEC has subpoenaed documents relating to the activities of our foreign subsidiaries, and we have produced responsive documents. Prior to the commencement of the SEC's formal investigation, we had engaged outside counsel to investigate an FCPA matter relating to the activities of one of our foreign subsidiaries in Latin America, and outside counsel concluded that those activities did not violate the Act. Thereafter and independent of these developments, our internal auditors, in the ordinary course of conducting compliance reviews, identified issues concerning accounting entries made by another of our Latin American subsidiaries. Our internal investigation of this matter is continuing. We have informed the SEC as to this matter, and the SEC has expanded its investigation to encompass it. We are cooperating with the SEC in its investigation, but we cannot predict the duration or the outcome of the SEC's investigation or whether the scope of the investigation will be expanded beyond the matters currently identified.

70

OTHER MATTERS

Beginning in 1996, we operated under a price regulation plan approved by the South Carolina Public Service Commission under existing state laws. In April 1999, however, the South Carolina Supreme Court invalidated this price regulation plan. In July 1999, we elected to be regulated under a new state statute, adopted subsequent to the Commission's approval of the earlier plan. The new statute allows telephone companies in South Carolina to operate under price regulation without obtaining approval from the Commission. The election became effective during August 1999. The South Carolina Consumer Advocate petitioned the Commission seeking review of the level of our earnings during the 1996-1998 period when we operated under the subsequently invalidated price regulation plan. The Commission voted to dismiss the petition in November 1999 and issued orders confirming the vote in February and June of 2000. In July 2000, the Consumer Advocate appealed the Commission's dismissal of the petition.

CWA AGREEMENTS

Our collective bargaining agreements with the Communications Workers of America (CWA) are scheduled to expire on August 4, 2001. Negotiations with the CWA over the terms of new agreements are expected to begin in early June 2001. The outcome of these negotiations cannot be determined at this time.

OTHER CLAIMS

We are subject to claims arising in the ordinary course of business involving allegations of personal injury, breach of contract, anti-competitive conduct, employment law issues, regulatory matters and other actions. BST is also subject to claims attributable to pre-divestiture events involving environmental liabilities, rates, taxes, contracts and torts. Certain contingent liabilities for pre-divestiture events are shared with AT&T Corp. While complete assurance cannot be given as to the outcome of any legal claims, we believe that any financial impact would not be material to our results of operations, financial position or cash flows.

NOTE N—OTHER EVENTS

CONTRACT TERMINATION PAYMENT

In October 1999, two of the Company's wholly-owned subsidiaries, BellSouth Products, Inc. (BSP) and BST filed a complaint against U. S. Electronics, Inc. (USE), in the United States District Court for the Northern District of Georgia. The complaint alleged that USE, a distributor of residential telephone equipment, breached its distributorship contract with BSP and violated the Robinson-Patman Act. USE denied the material allegations of the complaint and filed counterclaims against the Company, BSP, BST and several other BellSouth entities, alleging that the BellSouth companies were in breach of the distributorship contract. In January 2001, BellSouth settled the litigation and paid $200 million to USE for the termination of their then-existing agreement. BellSouth has entered into a new agreement with USE.

RESTRUCTURING OF WIRELESS VIDEO ENTERTAINMENT BUSINESS

In December 2000, we announced that we would restructure our video entertainment service and concentrate our entertainment business on our fiber optic-based wireline video operations. This move was made to better align our resources with our strategic priorities in broadband services.

We recorded charges of approximately $498, or $323 net of tax, related to this restructuring in the fourth quarter of 2000. These charges consisted of approximately $297 for asset writeoffs and writedowns, $168 for contract termination penalties, $20 to migrate customers to alternative service providers and $13 for severance and related benefit expenses. We commenced actions on the restructuring plan in December 2000 and expect to complete the plan by December 2001. Operating revenues generated by this business were $21 in 1998, $52 in 1999 and $75 in 2000. Operating losses generated by this business were $120 in 1998, $101 in 1999 and $110 in 2000.

WORKFORCE REDUCTION

In February 2000, we announced that we would reduce our domestic general and administrative staff by approximately 2,100 positions. These reductions are the result of the streamlining of work processes in conjunction with our shift to a more simplified management structure. As a result of these reductions, we recorded a one-time charge of $78, or $48 after tax, for severance and post-employment health benefits. We expect to complete the program during the first quarter of 2001.

SUBLEASE OF COMMUNICATIONS TOWERS

In June 1999, we signed a definitive agreement with Crown Castle International Corporation (Crown) for the sublease of all unused space on approximately 1,850 of our wireless communications towers in exchange for $610 to be paid in a combination of cash and Crown common stock. As of December 31, 2000 we have closed on 1,865 towers and received $614. We also

71

entered into a five-year, build-to-suit agreement with Crown covering up to 500 towers. Under a similar agreement, Crown will sublease all unused space on 773 PCS towers in exchange for $317 in cash. As of December 31, 2000, we have closed on 732 towers and received $300. In connection with this agreement, we entered into an exclusive three-year, build-to-suit agreement. The agreements with Crown were transferred to Cingular upon its formation.

NOTE O—TRACKING STOCK

In December 2000, our shareholders approved amendments to our charter that will permit us to issue our common stock in series, and our Board of Directors intends to initially designate two series: Latin America group stock, intended to reflect the separate performance of our Latin American businesses, and BLS group stock, intended to reflect the separate performance of all of our other businesses.

We plan a public offering of shares of Latin America group stock to finance our expansion in Latin America. At the time of a public offering, a number of shares of Latin America group stock will be reserved for the BLS group or for issuance to the holders of BLS group stock. We expect that we would distribute, as a dividend to the holders of BLS group stock, the reserved shares of Latin America group stock within six to 12 months following the public offering.

Our plans to create, issue and distribute Latin America group stock are subject to a number of conditions, including market conditions and other factors. The implementation and timing of these transactions are uncertain.

NOTE P—SUBSIDIARY FINANCIAL INFORMATION

We have fully and unconditionally guaranteed all of the outstanding debt securities of BST that are subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. BST is a 100% owned subsidiary of BellSouth. During 2000, the SEC issued new rules for reporting parent company guarantees of subsidiary securities. In accordance with these rules, BST will no longer be subject to the reporting requirements of the Securities Exchange Act of 1934, and we are providing the following condensed consolidating financial information.

BST is listed separately because it has debt securities, registered with the SEC, that we have guaranteed. All other operating subsidiaries that do not have registered securities guaranteed by us are presented in the Other column. The Parent column is comprised of headquarters entities which provide, among other services, executive management, administrative support and financial management to operating subsidiaries. The Adjustments column includes the necessary amounts to eliminate the intercompany balances and transactions between BST, Other and Parent to reconcile to our consolidated financial information.

Condensed Consolidating Statements of Income

	For the Year Ended December 31, 1998
	BST		Other		Parent		Adjustments			Total
Total operating revenues	$	16,372	$	7,499	$	626	$	(1,374	)	$	23,123
Total operating expenses		11,773		6,387		451		(1,392	)		17,219
Operating income		4,599		1,112		175		18			5,904
Interest expense		551		173		209		(96	)		837
Other income, net		3		540		279		(138	)		684
Income before income taxes		4,051		1,479		245		(24	)		5,751
Provision for income taxes		1,479		660		89		(4	)		2,224
Net income	$	2,572	$	819	$	156	$	(20	)	$	3,527

For the Year Ended December 31, 1999
BST	Other	Parent	Adjustments	Total

Total operating revenues	$	17,478	$	8,774		$	1,508	$	(2,536	)	$	25,224
Total operating expenses		12,533		8,174			626		(2,546	)		18,787
Operating income		4,945		600			882		10			6,437
Interest expense		559		180			531		(240	)		1,030
Other income, net		20		(79	)		429		(289	)		81
Income before income taxes		4,406		341			780		(39	)		5,488
Provision for income taxes		1,636		134			276		(6	)		2,040
Net income	$	2,770	$	207		$	504	$	(33	)	$	3,448

	For the Year Ended December 31, 2000
	BST		Other		Parent		Adjustments			Total
Total operating revenues	$	18,069	$	9,242	$	2,145	$	(3,305	)	$	26,151
Total operating expenses		12,805		8,667		1,130		(3,335	)		19,267
Operating income		5,264		575		1,015		30			6,884
Interest expense		695		281		936		(584	)		1,328
Other income, net		25		755		879		(617	)		1,042
Income before income taxes		4,594		1,049		958		(3	)		6,598
Provision for income taxes		1,689		385		299		5			2,378
Net income	$	2,905	$	664	$	659	$	(8	)	$	4,220

72

NOTE P—SUBSIDIARY FINANCIAL INFORMATION (Continued)

Condensed Consolidating Balance Sheets

	December 31, 1999											December 31, 2000
	BST		Other		Parent		Adjustments			Total		BST		Other		Parent			Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	39	$	418	$	830	$	—		$	1,287	$	62	$	999	$	—		$	—		$	1,061
Accounts receivable, net		3,094		2,325		5,156		(5,398	)		5,177		3,195		2,162		5,522			(5,722	)		5,157
Other current assets		300		649		125		(151	)		923		271		837		184			(104	)		1,188
Total current assets		3,433		3,392		6,111		(5,549	)		7,387		3,528		3,998		5,706			(5,826	)		7,406
Investments and advances		320		2,103		5,447		(1,773	)		6,097		322		7,505		10,592			(7,409	)		11,010
Property, plant and equipment, net		19,904		4,611		116		—			24,631		21,277		2,518		362			—			24,157
Deferred charges and other assets		1,278		112		285		(111	)		1,564		3,868		219		186			(93	)		4,180
Intangible assets, net		360		3,320		94		—			3,774		692		3,291		189			—			4,172
Total assets	$	25,295	$	13,538	$	12,053	$	(7,433	)	$	43,453	$	29,687	$	17,531	$	17,035		$	(13,328	)	$	50,925
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Debt maturing within one year	$	3,331	$	715	$	8,117	$	(4,510	)	$	7,653	$	1,830	$	1,724	$	8,791		$	(4,776	)	$	7,569
Other current liabilities		3,480		2,341		799		(878	)		5,742		3,514		4,054		1,105			(2,972	)		5,701
Total current liabilities		6,811		3,056		8,916		(5,388	)		13,395		5,344		5,778		9,896			(7,748	)		13,270
Long-term debt		6,135		1,510		2,712		(1,244	)		9,113		7,641		1,594		8,139			(4,911	)		12,463
Noncurrent liabilities:
Deferred income taxes		1,754		1,058		19		—			2,831		2,306		1,271		3			—			3,580
Other noncurrent liabilities		1,790		1,324		327		(142	)		3,299		3,209		1,316		321			(146	)		4,700
Total noncurrent liabilities		3,544		2,382		346		(142	)		6,130		5,515		2,587		324			(146	)		8,280
Shareholders' equity:		8,805		6,590		79		(659	)		14,815		11,187		7,572		(1,324	)		(523	)		16,912
Total liabilities and shareholders' equity	$	25,295	$	13,538	$	12,053	$	(7,433	)	$	43,453	$	29,687	$	17,531	$	17,035		$	(13,328	)	$	50,925

73

NOTE P—SUBSIDIARY FINANCIAL INFORMATION (Continued)

Condensed Consolidating Cash Flow Statements

	For the Year Ended December 31, 1998
	BST			Other			Parent			Adjustments			Total
Cash flows from operating activities	$	6,127		$	1,283		$	(412	)	$	743		$	7,741
Cash flows from investing activities		(3,483	)		(956	)		2,801			(3,849	)		(5,487	)
Cash flows from financing activities		(2,358	)		(305	)		(2,124	)		3,106			(1,681	)
Net increase (decrease) in cash	$	286		$	22		$	265		$	—		$	573

	For the Year Ended December 31, 1999
	BST			Other			Parent			Adjustments			Total
Cash flows from operating activities	$	5,573		$	1,945		$	(275	)	$	956		$	8,199
Cash flows from investing activities		(4,572	)		(1,871	)		416			(3,861	)		(9,888	)
Cash flows from financing activities		(1,293	)		(27	)		(1,752	)		2,905			(167	)
Net (decrease) increase in cash	$	(292	)	$	47		$	(1,611	)	$	—		$	(1,856	)

	For the Year Ended December 31, 2000
	BST			Other			Parent			Adjustments			Total
Cash flows from operating activities	$	8,024		$	2,014		$	(317	)	$	(1,131	)	$	8,590
Cash flows from investing activities		(5,238	)		(2,379	)		(412	)		(1,274	)		(9,303	)
Cash flows from financing activities		(2,764	)		950			(104	)		2,405			487
Net (decrease) increase in cash	$	22		$	585		$	(833	)	$	—		$	(226	)

NOTE Q—QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

In the following summary of quarterly financial information, all adjustments necessary for a fair presentation of each period were included.

		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
1999
Operating Revenues		$	5,973	$	6,148	$	6,422	$	6,681
Operating Income		$	1,607	$	1,314	$	1,674	$	1,842
Net Income		$	615	$	786	$	994	$	1,053
Earnings per share(a):
	Basic	$	.32	$	.42	$	.53	$	.56
	Diluted	$	.32	$	.41	$	.52	$	.55
2000
Operating Revenues		$	6,440	$	6,701	$	6,850	$	6,160
Operating Income		$	1,623	$	1,947	$	1,937	$	1,377
Net Income		$	1,001	$	1,064	$	1,036	$	1,119
Earnings per share(a):
	Basic	$	.53	$	.57	$	.55	$	.60
	Diluted	$	.53	$	.56	$	.55	$	.59

(a)

Due to rounding, the sum of quarterly EPS amounts may not agree to year-to-date EPS amounts.

The quarters shown were affected by the following:

•

Certain 1999 periods include foreign currency gains and losses associated with the devaluation of the Brazilian Real. Our share of these (losses) gains totaled $(280), or $(0.14) per share, for first quarter, $(75), or $(0.04) per share, for third quarter and $47, or $0.02 per share, for fourth quarter.



•

Second quarter 1999 includes an asset impairment loss which decreased operating income by $320 and net income by $187, or $0.10 per share.



•

Third quarter 1999 includes the recognition of foreign investment tax credits and a gain on the sale of our interest in Honolulu Cellular. These transactions increased net income by $95, or $0.05 per share, and $23, or $0.01 per share.



•

We adopted SAB 101 during the fourth quarter of 2000 and have restated operating revenues for the first three quarters of 2000 to comply with that standard. We originally reported revenues of $6,487 in first quarter 2000, $6,752 in second quarter 2000 and $6,903 in third quarter 2000.

74

NOTE Q—QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Continued)

•

First quarter 2000 also includes



•

$48, or $0.03 per share, in expense for our announced plan to reduce our domestic general and administrative staff, and



•

$68, or $0.04 per share, of income related to the restructuring of our ownership interest in the German wireless operator, E-Plus.



•

Fourth quarter 2000 also includes



•

income of $292, or $0.15 per share, from the redemption of AT&T from the AB Cellular partnership;



•

expense related to the restructuring of our wireless video entertainment business which decreased operating income by $498 and net income by $323, or $0.17 per share;



•

pension benefit settlement gains which increased operating income by $362 and net income by $223, or $0.12 per share; and



•

expense related to the USE contract termination which decreased operating income by $203 and net income by $125, or $0.07 per share.

NOTE R—SUBSEQUENT EVENTS

CONTRIBUTION OF AB CELLULAR TO CINGULAR

As discussed in note C, in December 2000 we exercised our option to redeem AT&T's 55.6% partnership interest in AB Cellular, which resulted in our 100% ownership of Houston and 87.35% of Galveston cellular investments, and approximately $1.1 billion of cash. Upon receiving FCC approval in early January 2001, we contributed our interests in these investments including the cash to Cingular. Our 40% ownership percentage of Cingular did not change as a result of this transaction, however our book value investment in Cingular increased approximately $1.7 billion, which represented the net assets of these investments and related cash.

SALE OF QWEST SHARES

During January 2001, we sold to Qwest a portion of our investment in Qwest totaling 22.2 million shares. We received total proceeds of $1,000 and recognized a loss of $50, or $33 after tax. In conjunction with this sale, we entered into an agreement with Qwest to purchase a minimum amount of data transport services over the next 5 years. We will pay Qwest for these services with a portion of the Qwest common stock which we still hold. Our stake in Qwest after this sale is about 3.1% of the company.

EXIT FROM PAYPHONE BUSINESS

In February 2001, we announced our decision to exit the payphone business, which includes selling or taking out of service 143,000 public payphones by the end of 2002. We expect any charge incurred associated with exiting this business will not be material.

75

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

No change in accountants or disagreements on the adoption of appropriate accounting standards or financial disclosure has occurred during the periods included in this report.

PART III

ITEMS 10 THROUGH 13.

Information regarding executive officers required by Item 401 of Regulation S-K is furnished in a separate disclosure on page 27 in Part I of this report since the registrant did not furnish such information in its definitive proxy statement prepared in accordance with Schedule 14A.

The additional information required by these items will be included in the registrant's definitive proxy statement dated March 13, 2001 as follows, and is herein incorporated by reference pursuant to General Instruction G(3):

Item	Description	Page(s) in Definitive Proxy Statement
10.	Directors and Executive Officers of the Registrant	6-9*; 26**
11.	Executive Compensation	11; 15***; 19-24
12.	Security Ownership of Certain Beneficial Owners and Management	12
13.	Certain Relationships and Related Transactions	9

*

Through the table "Committees of the Board" and ending at the caption "Audit Committee"

**

Only the matter under the caption "Section 16(a) Beneficial Ownership Reporting Compliance"

***

Beginning with "Compensation Committee Interlocks and Insider Participation"

PART IV

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

	Page(s) in This Form 10-K
a. Documents filed as a part of the report:
(1) Financial Statements:
Report of Independent Accountants	47
Consolidated Statements of Income	48
Consolidated Balance Sheets	49
Consolidated Statements of Cash Flows	50
Consolidated Statements of Shareholders' Equity and Comprehensive Income	51
Notes to Consolidated Financial Statements	52
(2) Financial statement schedules have been omitted because the required information is contained in the financial statements and notes thereto or because such schedules are not required or applicable.
(3) Exhibits: Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. All management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K Report pursuant to Item 14(c) are filed as Exhibits 10a through 10ii-3 inclusive.

76

Exhibit Number
3a	Amended Articles of Incorporation of BellSouth Corporation adopted December 5, 2000.
3b	Bylaws of BellSouth Corporation adopted December 5, 2000.
4	BellSouth Corporation Shareholder Rights Agreement. (Exhibit 1 to Report on Form 8-A dated November 23, 1999, File No. 1-8607.)
4a	No instrument which defines the rights of holders of long and intermediate term debt of BellSouth Corporation is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation, BellSouth Corporation hereby agrees to furnish a copy of any such instrument to the SEC upon request.
10a	BellSouth Corporation Officer Short Term Incentive Award Plan. (Exhibit 10y to Form 10-Q for the quarter ended September 30, 1996, File No. 1-8607.)
10b	BellSouth Corporation Executive Long Term Incentive Plan. (Exhibit 10e to Form 10-K for the year ended December 31, 1991, File No. 1-8607.)
10c	BellSouth Corporation Executive Long Term Disability and Survivor Protection Plan as amended and restated effective January 1, 1994. (Exhibit 10c-1 to Form 10-K for the year ended December 31, 1993, File No. 1-8607.)
10d	BellSouth Corporation Executive Transfer Plan. (Exhibit 10ee to Registration Statement No. 2-87846.)
10e	BellSouth Corporation Death Benefit Program. (Exhibit 10ff to Form 10-K for the year ended December 31, 1989, File No. 1-8607.)
10f	BellSouth Corporation Plan For Non-Employee Directors' Travel Accident Insurance. (Exhibit 10ii to Registration Statement No. 2-87846.)
10g	BellSouth Corporation Executive Incentive Award Deferral Plan as amended and restated effective September 23, 1996. (Exhibit 10g to Form 10-K for the year ended December 31, 1996, File No. 1-8607.)
10h	BellSouth Corporation Nonqualified Deferred Compensation Plan as amended and restated effective November 25, 1996. (Exhibit 10h to Form 10-K for the year ended December 31, 1996, File No. 1-8607.)
10I	BellSouth Corporation Supplemental Executive Retirement Plan as amended on March 23, 1998. (Exhibit 10i to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10j	BellSouth Corporation Directors Retirement Plan. (Exhibit 10qq to Form 10-K for the year ended December 31, 1986, File No. 1-8607.)
10k	BellSouth Corporation Financial Counseling Plan. (Exhibit 10r to Form 10-K for the year ended December 31, 1992, File No. 1-8607.)
10k-1	Amendment dated November 3, 1995 to the BellSouth Corporation Financial Counseling Plan for Executives. (Exhibit 101-1 to Form 10-K for the year ended December 31, 1995, File No. 1-8607.)
101	BellSouth Corporation Deferred Compensation Plan for Non-Employee Directors. (Exhibit 10gg to Registration Statement No. 2-87846.)
10m	BellSouth Corporation Executive Life Insurance Plan as amended and restated as the BellSouth Split-Dollar Life Insurance Plan, effective August 31, 1998. (Exhibit 10m to Form 10-K for the year ended December  31, 1998, File No. 1-8607.)
10n	BellSouth Corporation Non-Employee Director Stock Plan. (Exhibit 10z to Form 10-Q for the quarter ended March 31, 1997, File No. 1-8607.)
10p	BellSouth Non-Employee Directors Charitable Contribution Program. (Exhibit 10z to Form 10-K for the year ended December 31, 1992, File No. 1-8607.)
10q	BellSouth Personal Retirement Account Pension Plan, as amended and restated effective January 1, 1998. (Exhibit 10q to Form 10-K for the year ended December 31, 1998, File No. 1-8607.)
10q-1	Amendment dated December 22, 1998 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-1 to Form 10-K for the year ended December 31, 1998, File No. 1-8607.)
10q-2	Amendment dated March 22, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-2 to Form 10-Q for the quarter ended March 31, 1999, File No. 1-8607.)
10q-3	Amendment dated April 7, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-3 to Form 10-Q for the quarter ended March 31, 1999, File No. 1-8607.)
10q-4	Amendment dated May 6, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-4 to Form 10-Q for the quarter ended June 30, 1999, File No. 1-8607.)
10q-5	Amendment dated May 6, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-5 to Form 10-Q for the quarter ended June 30, 1999, File No. 1-8607.)

77

10q-6	Amendment dated May 7, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-6 to Form 10-Q for the quarter ended June 30, 1999, File No. 1-8607.)
10q-7	Amendment dated September 13, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-7 to Form 10-Q for the quarter ended September 30, 1999, File No. 1-8607.)
10q-8	Amendment dated December 22, 1999 to the BellSouth Personal Retirement Account Pension Plan. (Exhibit 10q-8 to Form 10-K for the year ended December 31, 1999, File No. 1-8607.)
10q-9	Amendment dated December 15, 2000 to the BellSouth Personal Retirement Plan.
10q-10	Amendment dated December 15, 2000 to the BellSouth Personal Retirement Plan.
10q-11	Amendment dated December 15, 2000 to the BellSouth Personal Retirement Plan.
10r	BellSouth Corporation Trust Under Executive Benefit Plan(s) as amended April 28, 1995. (Exhibit 10u-1 to Form 10-Q for the quarter ended June 30, 1995, File No. 1-8607.)
10r-1	Amendment dated May 23, 1996 to the BellSouth Corporation Trust Under Executive Benefit Plan(s). (Exhibit 10s-1 to Form 10-Q for the quarter ended June 30, 1996, File No. 1-8607.)
10s	BellSouth Telecommunications, Inc. Trust Under Executive Benefit Plan(s) as amended April 28, 1995. (Exhibit 10v-1 to Form 10-Q for the quarter ended June 30, 1995, File No. 1-8607.)
10s-1	Amendment dated May 23, 1996 to the BellSouth Telecommunications, Inc. Trust Under Executive Benefit Plan(s). (Exhibit 10t-1 to Form 10-Q for the quarter ended June 30, 1996, File No. 1-8607.)
10t	BellSouth Corporation Trust Under Board of Directors Benefit Plan(s) as amended April 28, 1995. (Exhibit 10w-1 to Form 10-Q for the quarter ended June 30, 1995, File No. 1- 8607.)
10t-1	Amendment dated May 23, 1996 to the BellSouth Corporation Trust Under Board Directors Benefit Plan(s). (Exhibit 10u-1 to Form 10-Q for the quarter ended June 30, 1996, File No. 1-8607.)
10u	BellSouth Telecommunications, Inc. Trust Under Board of Directors Benefit Plan(s) as amended April 28, 1995. (Exhibit 10x-1 to Form 10-Q for the quarter ended June 30, 1995, File No. 1-8607.)
10u-1	Amendment dated May 23, 1996 to the BellSouth Telecommunications, Inc. Trust Under Board of Directors Benefit Plan(s). (Exhibit 10v-1 to Form 10-Q for the quarter ended June 30, 1996, File No.  1-8607.)
10v-1	The Amended and Restated BellSouth Corporation Stock Plan Effective April 24, 1995 As Amended.
10v	BellSouth Corporation Stock Plan as amended on September 23, 1996 and November 24, 1996. (Exhibit 10v to Form 10-K for the year ended December 31, 1996, File No. 1-8607.)
10w	BellSouth Retirement Savings Plan as amended and restated effective July 1, 1996. (Exhibit 10x to Form 10-Q for the quarter ended September 30, 1996, File No. 1-8607.)
10w-1	Amendment dated February 18, 1997 to the BellSouth Retirement Savings Plan. (Exhibit 10w-1 to Form 10-Q for the quarter ended March 31, 1997, File No. 1-8607.)
10w-2	Amendment dated June 24, 1997 to the BellSouth Retirement Savings Plan. (Exhibit 10w-2 to Form 10-Q/A for the quarter ended June 30, 1997, File No. 1-8607.)
10w-3	Amendment dated May 5, 1998 to the BellSouth Retirement Savings Plan. (Exhibit 10w-3 to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10w-4	Amendment dated December 23, 1998 to the BellSouth Retirement Savings Plan. (Exhibit 10w-4 to Form 10-K for the year ended December 31, 1998, File No. 1-8607.)
10w-5	Amendment dated December 22, 1999 to the BellSouth Retirement Savings Plan. (Exhibit 10w-5 to Form 10-K for the year ended December 31, 1999, File No. 1-8607.)
10x	BellSouth Corporation Officer Estate Enhancement Plan and Agreement. (Exhibit 10x to Form 10-K for the year ended December 31, 1996, File No. 1-8607.)
10y	BellSouth Change in Control Executive Severance Agreements. (Exhibit 10y to Form 10-K for the year ended December 31, 1996, File No. 1-8607.)
10z	BellSouth Compensation Deferral Plan as amended and restated effective September 28, 1998. (Exhibit 10z to Form 10-Q for the quarter ended March 31, 1999, File No. 1-8607.)
10aa	BellSouth Employee Stock Investment Plan. (Exhibit 10aa to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10aa-1	Amendment dated November 27, 1996 to the BellSouth Employee Stock Investment Plan. (Exhibit 10aa-1 to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10aa-2	Amendment dated March 21, 1997 to the BellSouth Employee Stock Investment Plan. (Exhibit 10aa-2 to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10aa-3	Amendment dated May 5, 1998 to the BellSouth Employee Stock Investment Plan. (Exhibit 10aa-3 to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)

78

10aa-4	Amendment dated December 15, 2000 to the BellSouth Employee Stock Investment Plan. (Exhibit 10aa-4 to Registration Statement No. 333-52416.)
10bb	BellSouth Officer Motor Vehicle Policy. (Exhibit 10bb to Form 10-Q for the quarter ended March 31, 1998, File No. 1-8607.)
10cc	BellSouth Supplemental Life Insurance Plan, as amended and restated effective August 31, 1998. (Exhibit 10cc to Form 10-K for the year ended December 31, 1998, File No. 1-8607.)
10dd	Agreement with Chief Executive Officer. (Exhibit 10dd to Form 10-K for the year ended December 31, 1998, File No. 1-8607.)
10ee	Retirement Agreement dated October 27, 1999 for Jere A. Drummond. (Exhibit 10ee to Form 10-Q for the quarter ended September 30, 1999, File No. 1-8607.)
10ff	Retirement Agreement dated December 14, 1999 for Earle Mauldin. (Exhibit 10ff to Form 10-K for the year ended December 31, 1999, File No. 1-8607.)
10gg	Retention Agreement dated October 18, 2000 for Francis A. Dramis.
10gg-1	BellSouth Corporation Stock Plan Restricted Shares Award Agreement dated October 18, 2000 for Francis A. Dramis.
10gg-2	BellSouth Corporation Stock Plan Restricted Shares Award Escrow Agreement dated October 18, 2000 for Francis A. Dramis.
10hh	Retention Agreement dated October 26, 2000 for Ronald M. Dykes.
10hh-1	BellSouth Corporation Stock Plan Restricted Shares Award Agreement dated October 26, 2000 for Ronald M. Dykes.
10hh-2	BellSouth Corporation Stock Plan Restricted Shares Award Escrow Agreement dated October 26, 2000 for Ronald M. Dykes.
10ii	Retention Agreement dated October 18, 2000 for Gary D. Forsee.
10ii-1	BellSouth Corporation Stock Plan Restricted Shares Award Agreement dated October 18, 2000 for Gary D. Forsee.
10ii-2	BellSouth Corporation Stock Plan Restricted Shares Award Escrow Agreement dated October 18, 2000 for Gary D. Forsee.
10ii-3	BellSouth Corporation Stock Plan Restricted Shares Award Agreement dated September 1, 1999 for Gary D. Forsee.
11	Computation of Earnings Per Share.
12	Computation of Ratio of Earnings to Fixed Charges.
21	Subsidiaries of BellSouth.
24	Powers of Attorney.
99a	Annual report on Form 11-K for BellSouth Retirement Savings Plan for the fiscal year ended December 31, 2000 (to be filed under Form 11-K within 180 days of the end of the period covered by this report).
99b	Annual report on Form 11-K for BellSouth Savings and Security ESOP Plan for the fiscal year ended December 31, 2000 (to be filed under Form 11-K within 180 days of the end of the period covered by this report).

b. Reports on Form 8-K:

Date of Event	Subject
October 17, 2000	Announcement of Wireless Joint Venture
October 19, 2000	Third Quarter 2000 Earnings
November 16, 2000	Update on Fiscal 2000 and Fiscal 2001 Performance Guidance
December 19, 2000	Update on Video Entertainment Restructuring

79

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BELLSOUTH CORPORATION

/s/ W. PATRICK SHANNON W. Patrick Shannon
Vice President — Finance and
Supply Chain Management
February 28, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

PRINCIPAL EXECUTIVE OFFICER:
F. Duane Ackerman*
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

PRINCIPAL FINANCIAL OFFICER:
Ronald M. Dykes*
CHIEF FINANCIAL OFFICER

PRINCIPAL ACCOUNTING OFFICER:
W. Patrick Shannon*
Vice President—Finance and
Supply Chain Management

DIRECTORS:

F. Duane Ackerman*	Joseph M. Magliochetti*
Reuben V. Anderson*	John G. Medlin, Jr.*
James H. Blanchard*	Leo F. Mullin*
J. Hyatt Brown*	Eugene F. Murphy*
Armando M. Codina*	Robin B. Smith*
Kathleen F. Feldstein*	William S. Stavropoulos*
James P. Kelly*
	*By: /s/ W. PATRICK SHANNON W. Patrick Shannon (INDIVIDUALLY AND AS ATTORNEY-IN-FACT) February 28, 2001

80

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference of our report, dated February 26, 2001, relating to the financial statements, which appears in this Form 10-K, in the following Registration Statements of BellSouth Corporation:

—

Form S-3 (File No. 333-21233),



—

Form S-3 (File No. 333-31301),



—

Form S-3 (File No. 333-77053),



—

Form S-8 (File No. 33-38264),



—

Form S-8 (File No. 33-49459),



—

Form S-8 (File No. 333-13783),



—

Form S-8 (File No. 333-31600),



—

Form S-8 (File No. 333-49169),



—

Form S-8 (File No. 333-52416),



—

Form S-8 (File No. 333-52422).

Atlanta, Georgia
March 1, 2001

81

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EX-3.(A)

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Exhibit 3(a)

BELLSOUTH CORPORATION

AMENDED AND RESTATED
ARTICLES OF INCORPORATION

Incorporated Under the Laws

of the State of Georgia

on October 13, 1983

Amended and Restated by the Board of Directors February 23, 1998
Filed with the Secretary of State March 12, 1998

***

Amendments:

Adopted by Shareholders April 27, 1998
Filed with the Secretary of State May 8, 1998

Adopted by Board of Directors November 23, 1998
Filed with the Secretary of State December 11, 1998

Articles of Correction (to May 8, 1998 filing)
Filed with the Secretary of State December 11, 1998

Adopted by Board of Directors November 22, 1999
(to be effective December 11, 1999)
Filed with the Secretary of State December 10, 1999

Adopted by Board of Directors September 25, 2000
Adopted by Shareholders December 5, 2000
Filed with the Secretary of State January 12, 2001

Secretary's Department
19A01 Campanile Building
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BELLSOUTH CORPORATION

1.

    The name of the Corporation is BellSouth Corporation.

2.

    The Corporation is organized pursuant to the provisions of the Georgia Business Corporation Code.

3.

    The Corporation shall have perpetual duration.

4.

    The purposes for which the Corporation is organized are:

(1) To act as a holding company for the stock of companies engaged in the telephone and other communications businesses; and

(2) To conduct any business and engage in any activities not specifically prohibited to corporations for profit under the laws of the State of Georgia; and the Corporation shall have all the powers necessary to conduct such businesses and engage in such activities, including, but not limited to, the powers enumerated in the Georgia Business Corporation Code or any amendment thereto.

5.

    The aggregate number of shares which the Corporation is authorized to issue is 8.75 billion shares, of which 8.65 billion shares shall be designated "Common Stock" and have a par value of $1 per share and 100,000,000 shares shall be designated "First Preferred Stock" and have a par value of $1 per share.

    The number of authorized shares of any class or classes may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of shares of stock having a majority of the votes entitled to be cast by the holders of all shares, voting together as a single voting group, and without a vote of the holders of any class or series of stock, voting as a separate voting group, unless a vote of any such holders is required pursuant to the terms of such class or series or by law.

    The following is a description of the voting powers, preferences, designations, rights, qualifications, limitations and restrictions of the Common Stock:

    All shares of Common Stock shall be identical except that the Board of Directors of the Corporation is expressly authorized and empowered to create from the unissued Common Stock one or more series and prior to the issuance of any of such shares in any particular series, to fix and determine, in the manner provided by law, the voting powers, preferences, designations, rights, qualifications, limitations or restrictions of shares of such series, permitted by law and these Articles of Incorporation. Each share of Common Stock within an individual series shall be identical in all respects with the other shares of such series, but each series may have voting powers, preferences, designations, rights, qualifications, limitations or restrictions different from those of any other series.

    After the Board of Directors of the Corporation has established a series in accordance with applicable law and the terms of these Articles of Incorporation and unless otherwise specifically provided in the original Articles of Amendment establishing such series, the Board of Directors may at any time and from time to time increase or decrease the number of shares contained in such series (but not below the number of shares thereof then issued) in accordance with applicable law.

    Except as otherwise provided by law or by any provision of the Articles of Incorporation and subject to all the rights of any outstanding First Preferred Stock, the Common Stock shall together have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution. Such voting rights and rights upon

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dissolution may be allocated among one or more series of Common Stock pursuant to the terms of such series as fixed or as determined by the Board of Directors in the manner permitted by law and these Articles of Incorporation. If at any time there shall be outstanding shares of only one series of Common Stock or only shares having identical rights with all other outstanding shares of Common Stock, such shares shall together have all such voting rights and rights upon dissolution.

    The Common Stock of the Corporation as authorized by these Articles of Incorporation prior to the effectiveness of any Articles of Amendment to these Articles of Incorporation adopted by the Board of Directors creating and designating one or more series of Common Stock (the "Old Common Stock") shall be convertible into a new series of Common Stock designated as "BellSouth Corporation—BLS Group Common Stock" (the "BLS Group Stock") as follows. Upon the effectiveness of such Articles of Amendment creating the BLS Group Stock with voting powers, preferences, designation, rights, qualifications, limitations and restrictions as described in the proxy statement dated October 6, 2000, a copy of which shall be made available by the Corporation at any time on request to the holder of any share of Old Common Stock, each share of the Corporation's Old Common Stock outstanding at such time or held in the treasury of the Corporation shall be automatically redesignated, reclassified and converted into one share of BLS Group Stock.

    The authorized but unissued shares of First Preferred Stock and Common Stock shall be available for issue and sale at any time and from time to time, either in whole or in part, and upon such terms and conditions and for such consideration, not less than the par value thereof, as may be provided by the Board of Directors of the Corporation or, if authorized by the By-laws of the Corporation, the Executive Committee of the Board of Directors.

    The Corporation may issue fractional shares in connection with any dividend reinvestment plan and for any other legitimate corporate purposes permitted by the Georgia Business Corporation Code.

    The following is a description of the terms, provisions, preferences, rights, voting powers, restrictions and limitations of the First Preferred Stock:

    A. Dividends on the First Preferred Stock shall be cumulative.

    B. The First Preferred Stock shall rank superior to the Common Stock both as to the payment of dividends (other than dividends payable solely in shares of Common Stock) and as to amounts distributable upon the voluntary or involuntary liquidation of the Corporation.

    C. At any time after full cumulative dividends for all previous dividend periods shall have been paid on the First Preferred Stock and each other class of stock ranking superior to or in parity with the First Preferred Stock as to dividends, and after declaring and making provision for the payment in full of the quarterly dividends for the current dividend period on the First Preferred Stock and on each other class of stock ranking superior to or in parity with the First Preferred Stock as to dividends, and after all requirements with respect to any purchase, retirement or sinking fund or funds for all series of the First Preferred Stock and each other class of stock ranking superior to or in parity with the First Preferred Stock have been complied with, then, but not prior thereto, out of any funds of the Corporation lawfully available therefor, dividends may be declared and paid on the class or classes of stock junior to the First Preferred Stock as to dividends, subject to the respective terms and provisions applying thereto. The provisions of this paragraph shall not be applicable to dividends payable solely in shares of Common Stock to holders of the Common Stock. If at any time the Corporation shall fail to pay full cumulative dividends on any shares of the First Preferred Stock or on any other class of stock ranking superior to or in parity with the First Preferred Stock, or if at any time the Corporation shall be in default under the requirements with respect to any purchase, retirement or sinking fund or funds applicable to any series of the First Preferred Stock or any other class of stock ranking superior to or in parity with the First Preferred Stock, thereafter until such dividends shall have been paid or declared and set apart for payment and any other such default remedied, the Corporation shall not purchase, redeem, or otherwise acquire for consideration any shares of any class of stock then outstanding and ranking in parity with or junior to the First Preferred Stock.

    D. In the event of any voluntary or involuntary liquidation of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, after making provision for preferred stock superior to the First Preferred Stock as to payments upon liquidation and before any distribution to the holders of the Common Stock or any subordinate preferred stock, the holders of each series of the First Preferred Stock shall be entitled to receive out of the net assets of the Corporation an amount in cash for each share equal to the amount fixed and determined by the Board of Directors in the resolution providing for the issuance of the particular series of First

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Preferred Stock, plus all dividends accumulated and unpaid on each such share of First Preferred Stock up to the date fixed for distribution, and no more. If the amount payable to the holders of the First Preferred Stock cannot be paid in full, the holders of the shares of First Preferred Stock shall share ratably in any distribution of assets in proportion to the sums which would have been paid to them upon such distribution if all sums payable to holders of the First Preferred Stock and all classes of stock in parity with the First Preferred Stock were paid and discharged in full. For the purposes of this paragraph, the voluntary sale, conveyance, lease, exchange or transfer of all or substantially all the property or assets of the Corporation or a consolidation or merger of the Corporation with one or more other corporations (whether or not the Corporation is the corporation surviving such consolidation or merger) shall not be deemed to be a voluntary or involuntary liquidation.

    E. For purposes hereof, any class or classes of stock shall be deemed to rank (i) superior to the First Preferred Stock, either as to dividends or as to distributions in liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or to the receipt of amounts distributable upon liquidation or the Corporation, as the case may be, in preference or priority to the holders of the First Preferred Stock; (ii) in parity with the First Preferred Stock, either as to dividends or as to distributions in liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the First Preferred Stock, if the holders of such class or classes of stock shall be entitled to the receipt of dividends or to the receipt of amounts distributable upon liquidation of the Corporation, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority one over the other with respect to the holders of the First Preferred Stock; and (iii) junior to the First Preferred Stock, either as to dividends or as to distributions in liquidation, if the rights of the holders of such class or classes shall be subject or subordinate to the rights of the holders of the First Preferred Stock in respect of receipt of dividends (other than dividends payable in shares of Common Stock) or to the receipt of amounts distributable upon liquidation of the Corporation, as the case may be.

    F. All shares of First Preferred Stock shall be identical except that the Board of Directors of the Corporation is hereby expressly authorized and empowered to divide the First Preferred Stock into one or more series, and, prior to the issuance of any of such shares in any particular series, to fix and determine, in the manner provided by law, the following provisions of such series:

(a)

The distinctive designation of such series and the number of shares to be included in such series;



(b)

The rate of dividend, the times of payment and the date from which the dividends shall be accumulated;



(c)

Whether shares can be redeemed and, if so, the redemption price and the terms and conditions of redemption;



(d)

The amount payable upon shares in the event of voluntary or involuntary liquidation;



(e)

Purchase, retirement or sinking fund provisions, if any, for the redemption or purchase of shares;



(f)

The terms and conditions, if any, on which shares may be converted;



(g)

Whether or not shares have voting rights, and the extent of any such voting rights, which rights may include, without limitation, the right to vote generally with the Common Stock for the election of members of the Board of Directors and on other matters and/or the right, either generally or upon the occurrence of specified circumstances, to vote specially as a class for the election of one or more members of the Board of Directors; and



(h)

Any other preferences, rights, restrictions and qualifications of shares of such class or series, permitted by law and these Articles of Incorporation.

    G. After the Board of Directors of the Corporation has established a series in accordance with the terms of applicable law and these Articles of Incorporation, the Board of Directors may at any time and from time to time increase or decrease the number of shares contained in such series, but not below the number of shares thereof then issued, by adopting a resolution making such change.

    H. Each share of First Preferred Stock within an individual series shall be identical in all respects with the other shares of such series, except as to the date, if any, from which dividends thereon shall accumulate.

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5A. SERIES A FIRST PREFERRED STOCK

Designation and Amount. There shall be a series of the First Preferred Stock designated as "Series A First Preferred Stock". The number of shares constituting such series shall be 100 and such series shall have the preferences, limitations and relative rights set forth below.

    Section 1. Dividends and Distributions.

    (A) Subject to the prior and superior rights of the holders of any shares of any other series of First Preferred Stock or any other shares of preferred stock of the Corporation ranking prior and superior to the shares of Series A First Preferred Stock with respect to dividends, each holder of one one-hundredth (1/100) of a share (a "Unit") of Series A First Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, (i) quarterly dividends payable in cash on the first day of January, April, July, and October in each year (each such date being a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of such Unit of Series A First Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to the greater of (a) $.63 or (b) subject to the provision for adjustment hereinafter set forth, the aggregate per share amount of all cash dividends declared on shares of the Common Stock of the Corporation, par value $1.00 per share (the "Common Stock"), since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A First Preferred Stock, and (ii) subject to the provision for adjustment hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit equal to the aggregate per share amount of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise) declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A First Preferred Stock. In the event that the Corporation shall at any time after November 27, 1989, (the "Rights Declaration Date") (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the amount to which the holder of a Unit of Series A First Preferred Stock was entitled immediately prior to such event pursuant to the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) The Corporation shall declare a dividend or distribution on Units of Series A First Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.63 per Unit on the Series A First Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

    (C) Dividends shall begin to accrue and shall be cumulative on each outstanding Unit of Series A First Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of such Unit of Series A First Preferred Stock, unless the date of issuance of such Unit is prior to the record date for the first Quarterly Dividend Payment Date, in which case, dividends on such Unit shall begin to accrue from the date of issuance of such Unit, or unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Units of Series A First Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on Units of Series A First Preferred Stock in an amount less than the aggregate amount of all such dividends at the time accrued and payable on such Units shall be allocated pro rata on a unit-by-unit basis among all Units of Series A First Preferred Stock at the time outstanding. The Board of Directors may fix a record date for the determination of holders of Units of Series A First Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

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    Section 2. Voting Rights. The holders of Units of Series A First Preferred Stock shall have the following voting rights:

    (A) Subject to the provision for adjustment hereinafter set forth, each Unit of Series A First Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes per Unit to which holders of Units of Series A First Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) Except as otherwise provided herein or by law, the holders of Units of Series A First Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(C) (i) If at any time dividends on any Units of Series A First Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, then during the period (a "default period") from the occurrence of such event until such time as all accrued and unpaid dividends for all previous quarterly dividend period and for the current quarterly dividend period on all Units of Series A First Preferred Stock then outstanding shall have been declared and paid or set apart for payment, all holders of Units of Series A First Preferred Stock, voting separately as a class, shall have the right to elect two Directors.

    (ii) During any default period, such voting rights of the holders of Units of Series A First Preferred Stock may be exercised initially at a special meeting, called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting rights nor any right of the holders of Units of Series A First Preferred Stock to increase, in certain cases, the authorized number of Directors may be exercised at any meeting unless one-third of the outstanding Units of Series A Preferred Stock shall be present at such meeting in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Units of Series A First Preferred Stock of such rights. At any meeting at which the holders of Series A First Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting separately as a class, to elect Directors to fill two vacancies in the Board of Directors, if any such vacancies may then exist, or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Series A First Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of Units of Series A First Preferred Stock shall have exercised their right to elect Directors during any default period, the number of Directors shall not be increased or decreased except as approved by a vote of the holders of Units of Series A First Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to the Series A First Preferred Stock.

    (iii) Unless the holders of Series A First Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or shareholders owning in the aggregate not less than two-thirds of the total number of Units of Series A First Preferred Stock outstanding may request in writing, the calling of a special meeting of the holders of Units of Series A First Preferred Stock, which meeting shall thereupon be called by the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Units of Series A First Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Units of Series A First Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 30 days and not later than 50 days after such order or request or, if the Corporation is in default of the calling of such meeting within 50 days after such order or request, such meeting may be called on similar notice by any stockholder or shareholders owning in the aggregate not less than two-thirds of the total number of outstanding Units of Series A First Preferred Stock.

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    (iv) During any default period, the holders of shares of Common Stock and Units of Series A First Preferred Stock, and other classes or series of stock of the Corporation, if applicable, shall continue to be entitled to elect all the Directors until the holders of Units of Series A First Preferred Stock shall have exercised their right to elect two Directors voting as a separate class, after the exercise of which right (x) the Directors so elected by the holders of Units of Series A First Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) and filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of capital stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of capital stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.

    (v) Immediately upon the expiration of a default period, (x) the right of the holders of Units of Series A First Preferred Stock as a separate class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Units of Series A First Preferred Stock as a separate class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Articles or By-Laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Articles or By-Laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.

    (vi) The provisions of this paragraph (C) shall govern the election of Directors by holders of Units of Series A First Preferred Stock during any default period notwithstanding any provisions of the Articles to the contrary.

    (D) Except as set forth herein, holders of Units of Series A First Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Shares of Common Stock as set forth herein) for taking any corporate action.

    Section 3. Certain Restrictions.

    (A) Until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding Units of Series A First Preferred Stock shall have been paid in full, the Corporation shall not:

    (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of junior stock;

    (ii) declare or pay dividends on or make any other distributions on any shares of parity stock, except dividends paid ratably on Units of Series A First Preferred Stock and shares of all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of such Units and all such shares are then entitled;

    (iii) redeem or purchase or otherwise acquire for consideration shares of any parity stock, provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any junior stock;

    (iv) purchase or otherwise acquire for consideration any Units of Series A First Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such Units.

    (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

    Section 4. Reacquired Shares. Any Units of Series A First Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall become Treasury shares.

    Section 5. Liquidation, Dissolution or Winding Up.

    (A) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distributions shall be made (i) to the holders of shares of junior stock unless the holders of Units of Series A First Preferred

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Stock shall have received, subject to adjustment as hereinafter provided in paragraph (B), the greater of either (a) $.01 per Unit plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (b) an amount per unit equal to the aggregate per share amount to be distributed to holders of shares of Common Stock or (ii) to the holders of shares of parity stock, unless simultaneously therewith distributions are made ratably on Units of Series A First Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders of Units of Series A First Preferred Stock are entitled under clause (i)(a) of this sentence and to which the holders of shares of such parity stock are entitled, in each case, upon such liquidation, dissolution or winding up.

    (B) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the aggregate amount to which holders of Units of Series A First Preferred Stock were entitled immediately prior to such event pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 6. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or converted into other stock or securities, cash and/or any other property, then in any such case, Units of Series A First Preferred Stock shall at the same time be similarly exchanged for or converted into an amount per Unit (subject to the provision for adjustment hereinafter set forth) equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the amount set forth in the immediately preceding sentence with respect to the exchange or conversion of Units of Series A First Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 7. Redemption. The units of Series A First Preferred Stock shall not be redeemable.

    Section 8. Ranking. The Units of Series A First Preferred Stock shall rank junior to all other series of the Preferred Stock and to any other class of preferred stock that hereafter may be issued by the Corporation as to the payment of dividends and the distribution of assets, unless the terms of any such series or class shall provide otherwise.

    Section 9. Amendment. The Articles shall not hereafter be amended, either directly or indirectly, or through merger or consolidation with another corporation, in any manner that would alter or change the powers, preferences or special rights of the Series A First Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Units of Series A First Preferred Stock, voting separately as a class.

    Section 10. Fractional Shares. The Series A First Preferred Stock may be issued in Units or other fractions of a share, which Units or fractions shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Series A First Preferred Stock.

    Section 11. Certain Definitions. As used herein with respect to the Series A First Preferred Stock, the following terms shall have the following meanings:

    (A) The term "junior stock" (i) as used in Section 4, shall mean the Common Stock and any other class or series of capital stock of the Corporation hereafter authorized or issued over which the Series A First Preferred Stock has preference or priority as to the payment of dividends, and (ii) as used in Section 6, shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the Series A First

8

Preferred Stock has preference or priority in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

    (B) The term "parity stock" (i) as used in Section 4, shall mean any class or series of stock of the Corporation hereafter authorized or issued ranking pari passu with the Series A First Preferred Stock as to dividends, and (ii) as used in Section 6, shall mean any class or series of stock of the Corporation ranking pari passu with the Series A First Preferred Stock in the distribution of assets on any liquidation, dissolution or winding up.

5B. SERIES B FIRST PREFERRED STOCK

Designation and Amount. There shall be a series of the First Preferred Stock designated as "Series B First Preferred Stock". The number of shares constituting such series shall be 30,000,000 and such series shall have the preferences, limitations and relative rights set forth below.

    Section 1. Dividends and Distributions.

    (A) Subject to the prior and superior rights of the holders of any shares of any other series of First Preferred Stock or any other shares of preferred stock of the Corporation ranking prior and superior to the shares of Series B First Preferred Stock with respect to dividends, each holder of one one-thousandth (1/1000) of a share of Series B First Preferred Stock (a "Unit") shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, (i) quarterly dividends payable in cash on the first day of January, April, July, and October in each year (each such date being a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a Unit, in an amount per Unit (rounded to the nearest cent) equal to the greater of (a) $.01 or (b) subject to the provision for adjustment hereinafter set forth, the aggregate per share amount of all cash dividends declared on shares of the common stock of the Company (the "Common Stock"), since the immediately preceding quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit, and (ii) subject to the provision for adjustment hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit equal to the aggregate per share amount of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise) declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit. In the event that the Corporation shall at any time on or after the first issuance of a Unit (the "First Issuance Time") (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the amount to which the holder of a Unit was entitled immediately prior to such event pursuant to the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) On or after the First Issuance Time, the Corporation shall declare a dividend or distribution on Units as provided in paragraph (A) above immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that, in the event no dividend or distribution shall have been declared on the shares of Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

    (C) Dividends shall begin to accrue and shall be cumulative on each outstanding Unit from the Quarterly Dividend Payment Date next preceding the date of issuance of such Unit, unless the date of issuance of such Unit is prior to the record date for the first Quarterly Dividend Payment Date, in which case, dividends on such Unit shall begin to accrue from the date of issuance of such Unit, or unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Units entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on Units in an amount less than the aggregate amount of all such dividends at the time accrued and payable on such Units shall be allocated pro rata on a unit-by-unit basis among all Units at the time outstanding. The Board of Directors may fix a record date for the determination of holders of Units entitled

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to receive payment of a dividend or distribution declared thereon, which record date shall, be no more than 30 days prior to the date fixed for the payment thereof.

    Section 3. Voting Rights. The holders of Units shall have the following voting rights:

    (A) Subject to the provision for adjustment hereinafter set forth, each Unit shall entitle the holder thereof to one vote on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the First Issuance Time (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes per Unit to which holders of Units were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    (B) Except as otherwise provided herein or by law, the holders of Units and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(C) (i) If at any time dividends on any Units shall be in arrears in an amount equal to six quarterly dividends thereon, then during the period (a "default period") from the occurrence of such event until such time as all accrued and unpaid dividends for all previous quarterly dividend period and for the current quarterly dividend period on all Units then outstanding shall have been declared and paid or set apart for payment, all holders of Units, voting separately as a class, shall have the right to elect two (2) Directors, who shall serve in addition to the Directors elected by the holders of shares of Common Stock.

    (ii) During any default period, such voting rights of the holders of Units may be exercised initially at a special meeting, called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting rights nor any right of the holders of Units to increase, in certain cases, the authorized number of Directors may be exercised at any meeting unless one-third (¹/3) of the outstanding Units shall be present at such meeting in person or by proxy. The absence of a quorum of the holders of shares of Common Stock shall not affect the exercise by the holders of Units of such rights. At any meeting at which the holders of Units shall exercise such voting right initially during an existing default period, they shall have the right, voting separately as a class, to elect two (2) Directors, who shall serve in addition to the Directors elected by the holders of shares of Common Stock. If the number which may otherwise be elected at any special meeting does not amount to the required number, the holders of Units shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of Units shall have exercised their right to elect Directors during any default period, the number of Directors shall not be increased or decreased except as approved by a vote of the holders of Units as herein provided or pursuant to the rights of any equity securities ranking senior to the Units.

    (iii) Unless the holders of Units shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than 25% of the total number of Units outstanding may request in writing, the calling of a special meeting of the holders of Units, which meeting shall thereupon be called by the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Units are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Units by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or, if the Corporation is in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than 25% of the total number of outstanding Units.

    (iv) During any default period, the holders of shares of Common Stock and Units, voting together, and other classes or series of shares of the Corporation, if applicable, shall continue to be entitled to elect all the Directors until the holders of Units shall have exercised their right to elect two Directors voting as a separate class, after the exercise of which right (x) the Directors so elected by the holders of Units shall continue in office until their successors shall have been elected by such holders or until the expiration of the default

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period, whichever is earlier, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class or series of capital stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class or series of capital stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.

    (v) Immediately upon the expiration of a default period, (x) the right of the holders of Units as a separate class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Units as a separate class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Articles of Incorporation or By-Laws of the Corporation irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Articles of Incorporation or By-Laws of the Corporation). Any vacancies in the Board of Directors existing after giving effect to the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.

    (vi) The provisions of this paragraph (C) shall govern the election of Directors by holders of Units during any default period notwithstanding any other provisions of these Articles to the contrary.

    (D) Except as expressly set forth herein, holders of Units shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of shares of Common Stock as set forth herein) for taking any corporate action.

    Section 4. Certain Restrictions.

    (A) Until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding Units shall have been paid in full, the Corporation shall not:

    (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of junior stock;

    (ii) declare or pay dividends on or make any other distributions on any shares of parity stock, except dividends paid ratably on Units and shares of all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of such Units and all such shares are then entitled;

    (iii) redeem or purchase or otherwise acquire for consideration shares of any parity stock, provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any junior stock;

    (iv) purchase or otherwise acquire for consideration any Units, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such Units.

    (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

    Section 5. Reacquired Shares. Any Units purchased or otherwise acquired by the Corporation in any manner whatsoever shall become treasury shares.

    Section 6. Liquidation, Dissolution or Winding Up.

    (A) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distributions shall, be made (i) to the holders of shares of junior stock unless the holders of Units shall have received, subject to adjustment as hereinafter provided in paragraph (B), the greater of either (a) $.01 per Unit plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (b) an amount per Unit equal to the aggregate per share amount to be distributed to holders of shares of Common Stock or (ii) to the holders of shares of parity stock, unless simultaneously therewith distributions are made ratably on Units and all other shares of such parity stock in proportion to the total amounts to which the holders of Units are entitled under clause (i)(a) of this sentence and to which the holders of shares of such parity stock are entitled, in each case, upon such liquidation, dissolution or winding up.

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    (B) In the event the Corporation shall at any time after the First Issuance Time (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the aggregate amount to which holders of Units were entitled immediately prior to such event pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, share exchange or other transaction in which the shares of Common Stock are exchanged for or converted into other stock or securities, cash and/or any other property, then in any such case, Units shall at the same time be similarly exchanged for or converted into an amount per Unit (subject to the provision for adjustment hereinafter set forth) equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged. In the event the Corporation shall at any time after the First Issuance Time (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case, the amount set forth in the immediately preceding sentence with respect to the exchange or conversion of Units shall be adjusted by multiplying such amount by a fraction, the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

    Section 8. Redemption. The Units shall not be redeemable.

    Section 9. Ranking. The Units shall rank junior to all other series of the First Preferred Stock and to any other class of preferred stock that hereafter may be issued by the Corporation as to the payment of dividends and the distribution of assets, unless the terms of any such series or class shall provide otherwise.

    Section 10. Amendment. After the First Issuance Time, the Articles shall not be amended, either directly or indirectly, or through merger, consolidation, combination, share exchange or other transaction with another corporation, in any manner that would alter or change the powers, preferences or special rights of the Units so as to affect the Units adversely without the affirmative vote of the holders of at least a majority of the outstanding Units, voting separately as a class.

    Section 11. Fractional Shares. The Series B First Preferred Stock may be issued in Units or fractions of a Unit, which fractions shall entitle the holder, in proportion to such holder's fractional Units, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Units.

    Section 12. Certain Definitions. As used herein with respect to the Series B First Preferred Stock and Units, the following terms shall have the following meanings:

    (A) The term "junior stock" (i) as used in Section 4, shall mean the Common Stock and any other class or series of capital stock of the Corporation hereafter authorized or issued over which the Units have preference or priority as to the payment of dividends, and (ii) as used in Section 6, shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the Units have preference or priority in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

    (B) The term "parity stock" (i) as used in Section 4, shall mean any class or series of stock of the Corporation hereafter authorized or issued ranking pari passu with the Units as to dividends, and (ii) as used in Section 6, shall mean any class or series of stock of the Corporation ranking pari passu with the Units in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

5C. TREASURY STOCK

    Shares of stock of the Corporation which have been issued, have been subsequently acquired by and belong to the Corporation and have not been canceled, shall be designated treasury shares, and shall be deemed to be issued but not outstanding.

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6.

    No holder of shares of stock of the Corporation of any class shall have or be entitled to any preemptive rights to subscribe for or to purchase any shares or other securities issued by the Corporation.

7.

    Subject to the provisions of the Georgia Business Corporation Code, the Board of Directors shall have the power to distribute a portion of the assets of the Corporation, in cash or in property, to holders of shares of the Corporation out of the capital surplus of the Corporation.

8.

    The Corporation shall have the full power to purchase and otherwise acquire, and dispose of, its own shares and securities granted by the laws of the State of Georgia and shall have the right to purchase its shares out of its unreserved and unrestricted capital surplus available therefor as well as out of its unreserved and unrestricted earned surplus available therefor.

9.

    The Corporation shall not commence business until it shall have received not less than $500 in payment for the issuance of its shares.

10.

I. As used in this Article 10, the term:

    (1) "Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person.

    (2) "Announcement date" means the date of the first general public announcement of the proposal of the business combination.

    (3) "Associate," when used to indicate a relationship with any person, means:

    (A) Any corporation or organization, other than the corporation or a subsidiary of the corporation, of which such person is an officer, director, or partner or is the beneficial owner of 10 percent or more of any class of equity securities;

    (B) Any trust or other estate in which such person has a beneficial interest of 10 percent or more, or as to which such person serves as trustee or in a similar fiduciary capacity; and

    (C) Any relative or spouse of such person, or any relative of such spouse, who has the same home as such person.

    (4) "Beneficial owner"—a person shall be considered to be the beneficial owner of any equity securities:

    (A) Which such person or any of such person's affiliates or associates owns, directly or indirectly;

    (B) Which such person or any of such person's affiliates or associates, directly or indirectly, has:

    (i) The right to acquire, whether such right is exercisable immediately or only after the passage of time, pursuant to any agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; or

    (ii) The right to vote pursuant to any agreement, arrangement, or understanding; or

    (C) Which are owned, directly or indirectly, by any other person with which such person or any of such person's affiliates or associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of equity securities.

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    (5) "Business combination" means:

    (A) Any merger of the corporation or any subsidiary with (i) any interested shareholder or (ii) any other corporation, whether or not itself an interested shareholder, which is, or after the merger would be, an affiliate of an interested shareholder that was an interested shareholder prior to the consummation of the transaction;

    (B) Any share exchange with (i) any interested shareholder or (ii) any other corporation, whether or not itself an interested shareholder, which is, or after the share exchange would be, an affiliate of an interested shareholder that was an interested shareholder prior to the consummation of the transaction;

    (C) Any sale, lease, transfer, or other disposition, other than in the ordinary course of business, in one transaction or in a series of transactions in any 12 month period, to any interested shareholder or any affiliate of any interested shareholder, other than the corporation or any of its subsidiaries, of any assets of the corporation or any subsidiary having, measured at the time the transaction or transactions are approved by the board of directors of the corporation, an aggregate book value as of the end of the corporation's most recently ended fiscal quarter of 10 percent or more of the net assets of the corporation as of the end of such fiscal quarter;

    (D) The issuance or transfer by the corporation, or any subsidiary, in one transaction or a series of transactions in any 12 month period, of any equity securities of the corporation or any subsidiary which have an aggregate market value of 5 percent or more of the total market value of the outstanding common and preferred shares of the corporation whose shares are being issued, to any interested shareholder or any affiliate of any interested shareholder, other than the corporation or any of its subsidiaries, except pursuant to the exercise of warrants or rights to purchase securities offered pro rata to all holders of the corporation's voting shares or any other method affording substantially proportionate treatment to the holders of voting shares;

    (E) The adoption of any plan or proposal for the liquidation or dissolution of the corporation in which anything other than cash will be received by an interested shareholder or an affiliate of any interested shareholder; or

    (F) Any reclassification of securities, including any reverse stock split, or recapitalization of the corporation, or any merger of the corporation with any of its subsidiaries, or any share exchange with any of its subsidiaries, which has the effect, directly or indirectly, in one transaction or a series of transactions in any 12 month period, of increasing by 5 percent or more the proportionate amount of the outstanding shares of any class or series of equity securities of the corporation or any subsidiary which is directly or indirectly beneficially owned by any interested shareholder or any affiliate of any interested shareholder.

    (6) "Continuing director" means any member of the board of directors who is not an affiliate or associate of an interested shareholder or any of its affiliates, other than the corporation or any of its subsidiaries, and who was a director of the corporation prior to the determination date, and any successor to such continuing director who is not an affiliate or an associate of an interested shareholder or any of its affiliates, other than the corporation or its subsidiaries, and is recommended or elected by a majority of all of the continuing directors.

    (7) "Control," including the terms "controlling," "controlled by," and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise, and the beneficial ownership of shares representing 10 percent or more of the votes entitled to be cast by a corporation's voting shares shall create an irrebuttable presumption of control.

    (8) "Corporation," in addition to the definition contained in Georgia Business Corporation Code Section 14-2-140, shall include any trust merging with a domestic corporation pursuant to Georgia Business Corporation Code Section 53-12-59.

    (9) "Determination date" means the date on which an interested shareholder first became an interested shareholder.

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    (10) "Fair market value" means:

    (A) In the case of securities, the highest closing sale price, during the period beginning with and including the determination date and for 29 days prior to such date, of such a security on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such securities are listed, or, if such securities are not listed on any such exchange, the highest closing sales price or, if none is available, the average of the highest bid and asked prices reported with respect to such a security, in each case during the 30 day period referred to above, on the National Association of Securities Dealers, Inc., Automatic Quotation System, or any system then in use, or, if no such quotations are available, the fair market value on the date in question of such a security as determined in good faith at a duly called meeting of the board of directors by a majority of all of the continuing directors, or, if there are no continuing directors, by the entire board of directors; and

    (B) In the case of property other than securities, the fair market value of such property on the date in question as determined in good faith at a duly called meeting of the board of directors by a majority of all of the continuing directors, or, if there are no continuing directors, by the entire board of directors of the corporation.

    (11) "Interested shareholder" means any person, other than the corporation or its subsidiaries, that:

    (A) Is the beneficial owner of 10 percent or more of the voting power of the outstanding voting shares of the corporation; or

    (B) Is an affiliate of the corporation and, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10 percent or more of the voting power of the then outstanding voting shares of the corporation.

    For the purpose of determining whether a person is an interested shareholder, the number of voting shares deemed to be outstanding shall not include any unissued voting shares which may be issuable pursuant to any agreement, arrangement, or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

    (12) "Net assets" means the amount by which the total assets of the corporation exceed the total debts of the corporation.

    (13) "Voting shares" means shares entitled to vote generally in the election of directors.

II. In addition to any vote otherwise required by law or the articles of incorporation of the corporation, a business combination shall be:

    (1) Unanimously approved by the continuing directors, provided that the continuing directors constitute at least three members of the board of directors at the time of such approval; or

    (2) Recommended by at least two-thirds of the continuing directors and approved by a majority of the votes entitled to be cast by holders of voting shares, other than voting shares beneficially owned by the interested shareholder who is, or whose affiliate is, a party to the business combination.

III. (a) As used in this Section III, the term "interested shareholder" refers to the interested shareholder which is party to, or an affiliate of which is party to, the business combination in question.

  (b) The vote required by Section II of this Article does not apply to a business combination if each of the following conditions is met:

    (1) The aggregate amount of the cash, and the fair market value as of five days before the consummation of the business combination of consideration other than cash, to be received per share by holders of any class of common shares or any class or series of preferred shares in such business combination is at least equal to the highest of the following:

    (A) The highest per share price, including any brokerage commissions, transfer taxes, and soliciting dealers' fees, paid by the interested shareholder for any shares of the same class or series acquired by it:

    (i) Within the two-year period immediately prior to the announcement date; or

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    (ii) In the transaction in which it became an interested shareholder, whichever is higher;

    (B) The fair market value per share of such class or series as determined on the announcement date and as determined on the determination date, whichever is higher; or

    (C) In the case of shares other than common shares, the highest preferential amount per share to which the holders of shares of such class or series are entitled in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the corporation; provided that this subparagraph shall only apply if the interested shareholder has acquired shares of such class or series within the two-year period immediately prior to the announcement date;

    (2) The consideration to be received by holders of any class or series of outstanding shares is to be in cash or in the same form as the interested shareholder has previously paid for shares of the same class or series. If the interested shareholder has paid for shares of any class or series of shares with varying forms of consideration, the form of consideration for such class or series of shares shall be either cash or the form used to acquire the largest number of shares of such class or series previously acquired by it;

    (3) After the interested shareholder has become an interested shareholder and prior to the consummation of such business combination:

    (A) Unless approved by a majority of the continuing directors, there shall have been:

    (i) No failure to declare and pay at the regular date therefor any full periodic dividends, whether or not cumulative, on any outstanding preferred shares of the corporation;

    (ii) No reduction in the annual rate of dividends paid on any class of common shares, except as necessary to reflect any subdivision of the shares;

    (iii) An increase in such annual rate of dividends as is necessary to reflect any reclassification, including any reverse share split, recapitalization, reorganization, or any similar transaction which has the effect of reducing the number of outstanding shares; and

    (iv) No increase in the interested shareholder's percentage ownership of any class or series of shares of the corporation by more than 1 percent in any 12 month period.

    (B) The provisions of divisions (b)(3)(A)(i) and (ii) of this Section III shall not apply if the interested shareholder or an affiliate or associate of the interested shareholder did not vote as a director of the corporation in a manner inconsistent with divisions (b)(3)(A)(i) and (ii) of this Section III and the interested shareholder, within ten days after any act or failure to act inconsistent with divisions (b)(3)(A)(i) and (ii) of this Section III, notified the board of the corporation in writing that the interested shareholder disapproved thereof and requested in good faith that the board of directors rectify the act or failure to act; and

    (4) After the interested shareholder has become an interested shareholder, the interested shareholder has not received the benefit, directly or indirectly, except proportionately as a shareholder, of any loans, advances, guarantees, pledges, or other financial assistance or any tax credits or other tax advantages provided by the corporation or any of its subsidiaries, whether in anticipation of or in connection with such business combination or otherwise.

IV. (a) This Article may only be repealed or amended by the affirmative vote of at least two-thirds of the continuing directors and a majority of the votes entitled to be cast by voting shares of the corporation, other than shares beneficially owned by any interested shareholder and affiliates and associates of any interested shareholder, in addition to any other vote required by the articles of incorporation or by law.

  (b) The requirements of Section II of this Article shall never apply to business combinations with an interested shareholder or its affiliates if, during the three-year period immediately preceding the consummation of the business combination, the interested shareholder has not at any time during such period:

    (1) Ceased to be an interested shareholder; or

    (2) Increased its percentage ownership of any class or series of common or preferred shares of the corporation by more than 1 percent in any 12 month period.

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11.

No director of the Corporation shall be liable to the Corporation or its shareholders for monetary damages for any action taken, or any failure to take any action, as a director, except for liability (i) for any appropriation, in violation of his or her duties, of any business opportunity of the Corporation, (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law, (iii) for the types of liability set forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for any transaction from which the director received an improper personal benefit.

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AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BELLSOUTH CORPORATION
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5.
5A. SERIES A FIRST PREFERRED STOCK
5B. SERIES B FIRST PREFERRED STOCK
5C. TREASURY STOCK
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EX-3.(B)

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Exhibit 3(b)

BELLSOUTH CORPORATION

Incorporated under the Laws

of the State of Georgia

on October 13, 1983

Adopted

October 24, 1983

BY-LAWS

As Amended by Board of Directors September 25, 2000 and
Adopted by Shareholders December 5, 2000

Secretary Department
19A01 Campanile Building
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610

CONTENTS

Article I	Shareholders
Article II	Directors
Article III	Officers
Article IV	Stock
Article V	Business Combinations
Article VI	Seal
Article VII	Indemnity
Article VIII	Amendment of By-laws

2

BY-LAWS
OF
BELLSOUTH CORPORATION

ARTICLE I

Shareholders

    Section 1. Annual Meeting. The annual meeting of the shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held on such date and at such time and place as the Board of Directors may by resolution provide. Notice of any nominations of persons for election to the Board of Directors or of any other business to be brought before an annual meeting of shareholders by a shareholder must be provided in writing to the Secretary of the Corporation not later than the close of business on the seventy-fifth (75^th) day nor earlier than the close of business on the one hundred and twentieth (120th) day prior to the date which is twelve (12) months after the anniversary of the annual meeting of shareholders held in the prior year. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected, and evidence reasonably satisfactory to the Company that such nominee has no interests that would limit their ability to fulfill their duties of office; (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class or the series and number of shares of the Corporation that are owned beneficially and held of record by such shareholder and such beneficial owner. In addition, if the shareholder intends to solicit proxies from the shareholders of the Corporation, such shareholder's notice shall notify the Corporation of this intent. If a shareholder fails to notify the Corporation of his or her intent to solicit proxies and does in fact solicit proxies, the Chairman of the Board shall have the authority, in his or her discretion, to strike the proposal or nomination by the shareholder.

    Section 2. Special Meeting. A special meeting of the shareholders may be called at any time by the Board of Directors or the Chief Executive Officer and shall be called upon written request to the Chief Executive Officer or Secretary, signed by the holders of at least three-quarters of the voting power of the outstanding shares entitled to vote at such meeting.

    The written request shall set forth (a) a brief description of the purpose of the proposed meeting and business to be brought before such meeting, and any material interest in such business of any shareholder and beneficial owner, if any, on whose behalf the proposal is made; (b) if the shareholders requesting the special meeting propose to nominate one or more persons for election as directors, as to each such person all information that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including each such person's written consent to being named in a proxy statement as a nominee and to serving as director if elected, and evidence reasonably satisfactory to the Company that such nominee has no interests that would limit his or her ability to fulfill his or her duties of office; and (c) as to the shareholders giving the notice and the beneficial owner, if any on whose behalf the request is made, (i) the name and address of each such shareholder, as they appear on the Company's books, and of such beneficial owner and (ii) the class or the series and number of shares of the Company that are owned beneficially and held of record by such shareholders and beneficial owners. In addition, if the shareholder intends to solicit proxies from the shareholders of the Corporation, such shareholder's notice shall notify the Corporation of this intent. If a shareholder fails to notify the Corporation of his or her intent to solicit proxies and does in fact solicit proxies, the Chairman of the Board shall have the authority, in his or her discretion, to strike the proposal or nomination proposed by the shareholder.

    Section 3. Notice of Meetings of Shareholders. Written notice of each meeting of shareholders, stating the place and time of the meeting, shall be mailed to each shareholder entitled to vote at such meeting at such shareholder's address shown on the records of the Corporation not less than thirty nor more than sixty days prior

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to such meeting. If the notice is for a special meeting, the notice shall also include the purpose or purposes for which the special meeting is being called and shall indicate that the notice is being issued by or at the direction of the person or persons calling the meeting. Failure to receive notice of any meeting of shareholders shall not invalidate the meeting. Notice of any meeting may be given by or at the direction of the Chairman, the President, the Secretary or by the person or persons calling such meeting.

    Section 4. Quorum; Required Shareholder Vote. A quorum for the transaction of business at any meeting of the shareholders shall exist when the holders of forty per centum of the voting power of the outstanding shares entitled to vote are represented either in person or by proxy. At any duly constituted meeting, or at any adjournment thereof, the affirmative vote of the voting power of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless a greater vote is required by law, by the Articles of Incorporation or by these By-laws. The holders of a majority of the voting power of the shares represented at a meeting may adjourn such meeting to another time or place despite the absence of a quorum.

    Section 5. Ballots. All elections by shareholders shall be by ballot.

    Section 6. Proxies. A shareholder may vote either in person or by a proxy which such shareholder has duly executed in writing, or by any other method permitted by the Official Code of Georgia Annotated.

    Section 7. Inspectors of Elections. The Board of Directors, in advance of any shareholders' meeting, shall appoint an Inspector or Inspectors to act at the meeting or any adjournment, thereof. Any vacancy may be filled by appointment of the Board in advance of the meeting or at the meeting by the person presiding thereat.

ARTICLE II

Directors

    Section 1. Power of Directors. The Board of Directors shall direct the management of the business and affairs of the Corporation and may exercise all of the powers of the Corporation, subject to any restrictions imposed by law, by the Articles of Incorporation or by these By-laws.

    Section 2. Composition of the Board. The Board of Directors of the Corporation shall consist of fourteen (14) natural persons of the age of eighteen years or over. The Directors shall be divided into three classes (of at least three directors each), as nearly equal in number of directors as possible, with the term of each class to be three years. Each Director shall hold office for the term for which elected, which term shall end at an Annual Meeting of Shareholders, and until his successor shall have been elected and qualified, or until his earlier retirement, resignation, removal from office, or death. The authorized number of directors may be increased or decreased from time to time by vote of a majority of the then authorized number of directors or by the affirmative vote of the holders of at least 75% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single voting group; provided, however, that such number shall not be less than nine.

    Section 3. Election of Chairman of the Board and Vice Chairmen of the Board. The Board of Directors may elect from among their number a Chairman of the Board, and may also elect from among their number a Vice Chairman or Vice Chairmen of the Board (referred to in these By-laws as a "Vice Chairman" or "Vice Chairmen").

    Section 4. Chairman of the Board. The Chairman of the Board (referred to in these By-laws as the "Chairman") shall preside, when present, at all meetings of the Board of Directors and shall have such other powers and duties as may be conferred upon or assigned to the Chairman by the Board of Directors.

    Section 5. Vice Chairmen of the Board. The Vice Chairman (or if there be more than one Vice Chairman, the Vice Chairman designated by the Chairman) of the Board, shall preside at meetings of the Board of Directors in the absence of the Chairman and at meetings of the Shareholders in the absence of the Chief Executive Officer, and shall perform such other duties as the Board or Chairman may assign.

    Section 6. Meetings of the Board; Notice of Meetings; Waiver of Notice. The Annual Meeting of the Board of Directors, for the purpose of electing officers and transacting such other business as may be brought before the meeting, shall be held each year immediately following the Annual Meeting of the shareholders. Regular meetings shall be held at such times and places as the Board of Directors or Committees may determine, and no notice of

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such regular meetings need be given. Special meetings of the Board of Directors may be called at any time by the Chief Executive Officer or by any two members of the Executive Committee, and shall be called by the Chief Executive Officer or the Secretary upon request in writing signed by two or more directors and specifying the purpose or purposes of the meeting. Notice of the time and place of such special meetings shall be given to each Director, in person or by first class mail, telegraph, cablegram or telephone, or by any other means customary for expedited business communications, at least two (2) days before the meeting. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be stated in the notice of such meeting.

    Section 7. Quorum; Vote Requirement. One-third of the number of Directors fixed in these By-laws at any time shall constitute a quorum for the transaction of business at any meeting. When a quorum is present, the vote of a majority of the Directors present shall be the act of the Board of Directors, unless a greater vote is required by law, by the Articles of Incorporation or by these By-laws.

    Section 8. Action of Board Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors or any committee thereof may be taken without a meeting if written consent, setting forth the action so taken, is signed by all the Directors or committee members and filed with the minutes of the proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous affirmative vote of the Board of Directors or committee, as the case may be.

    Section 9. Committees. The Board of Directors, by resolution adopted by a majority of all of the Directors, may designate from among its members an Executive Committee and other committees, each composed of three (3) or more Directors, and may fix the quorum thereof. The Board of Directors, by resolution adopted by a majority of all of the Directors, may also designate from among its members special committees, each composed of one (1) or more Directors, and may fix the quorum thereof if any such committee shall be composed of more than one Director. Any committee so designated shall serve at the pleasure of and may exercise such authority as is delegated by the Board of Directors, provided that no committee shall have the authority of the Board of Directors to (1) approve or propose to shareholders action required to be approved by shareholders, (2) fill vacancies on the board of directors or on any of its committees, (3) amend the Articles of Incorporation, (4) adopt, amend, or repeal By-laws, or (5) approve a plan of merger not requiring shareholder approval.

    Section 10. Executive Committee. The Executive Committee shall consist of the Chairman and the President and such other Directors as are designated from time to time by the Board of Directors. The Chief Executive Officer may designate an Alternate Chairman who shall preside during the absence or disability of the Chief Executive Officer. The Executive Committee shall, except as otherwise provided herein, by law or by resolution of the Board of Directors, have all the authority of the Board of Directors during the intervals between the meetings of the Board of Directors.

    Section 11. Vacancies. A vacancy occurring in the Board of Directors by reason of the removal of a Director by the shareholders shall be filled by the shareholders, or, if authorized by the shareholders, by the remaining Directors. Any other vacancy occurring in the Board of Directors, including, without limitation, any vacancy occurring by reason of an amendment to these By-laws increasing the number of Directors, may be filled by the affirmative vote of a majority of the remaining Directors, though less than a quorum of the Board of Directors, or, if the vacancy is not so filled, or if no director remains, by the shareholders. A Director elected to fill a vacancy shall serve for the unexpired term of his predecessor in office or, if such vacancy occurs by reason of an amendment to these By-laws increasing the number of Directors, until the next election of Directors by the shareholders and the election and qualification of the successor.

    Section 12. Telephone Conference Meetings. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board or committee by means of telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting.

    Section 13. Removal of Directors. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or all directors, may be removed from office at any time, with cause, only by the affirmative vote of the holders of at least 75% of the voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single voting group.

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ARTICLE III

Officers

    Section 1. Executive Structure. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a Chairman of the Board, if there be one, a President, a Vice Chairman or Vice Chairmen of the Board, if there be any and if elected as an officer or officers of the Corporation, such number of Executive Vice Presidents and Vice Presidents as the Board of Directors shall from time to time determine, a Secretary, a Treasurer, a Controller and such other officers or assistant officers as may be elected or appointed by the Board of Directors. The Board shall designate either the Chairman or the President as the Chief Executive Officer of the Corporation and may designate a Chief Operating Officer. Each officer shall hold office for the term for which such officer has been elected or appointed and until such officer's successor has been elected or appointed and has qualified, or until such officer's earlier resignation, removal from office, or death. Any two or more offices may be held by the same person, except that neither the Chairman nor the President shall serve as Secretary or Assistant Secretary.

    Section 2. Chief Executive Officer. The Chief Executive Officer shall, under the direction of the Board of Directors, have responsibility for the general direction of the Corporation's business, policies and affairs. The Chief Executive Officer shall preside, when present, at all meetings of the shareholders and at all meetings of the Executive Committee. The Chief Executive Officer shall have such other authority and perform such other duties as usually appertain to the chief executive office in business corporations or as are provided by the Board of Directors. The Chief Executive Officer shall be empowered at any time and from time to time to issue and promulgate rules, regulations and directives relating to the conduct of the business and affairs of the Corporation, and the Secretary of the Corporation shall maintain a record of such rules, regulations and directives.

    Section 3. Chief Operating Officer. If there be one, the Chief Operating Officer shall, under the direction of the Chief Executive Officer, have direct superintendence of the Corporation's business, policies, properties and affairs. The Chief Operating Officer shall have such further powers and duties as from time to time may be conferred upon or assigned to such officer by the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chief Executive Officer, the Chief Operating Officer shall perform the duties and exercise the powers of the Chief Executive Officer.

    Section 4. President. The President shall have such powers and duties as from time to time may be conferred upon or assigned to the President by the Board of Directors or the Chief Executive Officer (if the President is not the Chief Executive Officer).

    Section 5. Vice Presidents. The Executive Vice Presidents, if any, and Vice Presidents shall have such powers and duties as from time to time may be conferred upon or assigned to them by the Board of Directors, the Chairman, or the President. An Executive Vice President or other officer may be responsible for the assignment of duties to subordinate Vice Presidents.

    Section 6. Secretary. The Secretary shall send all requisite notices of meetings of the shareholders, the Board of Directors, and the Executive Committee. The Secretary shall attend all meetings of the shareholders, the Board of Directors, and the Executive Committee, and shall keep a true and faithful record of the proceedings. The Secretary shall have custody of the seal of the Corporation, and of all records, books, documents, and papers of the Corporation, except those required to be in the custody of the Treasurer or the Controller and except such subsidiary records as may be kept in departmental offices. The Secretary shall sign and execute all documents which require his signature and execution, and shall affix the seal of the Corporation thereto and attest the same when necessary. Assistant Secretaries shall have such of the authority and perform such of the duties of the Secretary as may be provided in these By-laws or assigned to them by the Board of Directors or by the Secretary. During the Secretary's absence or inability, the Secretary's authority and duties shall be possessed by such Assistant Secretary or Assistant Secretaries as the Board of Directors, or the Secretary with the approval of the Chairman, or the President may designate.

    Section 7. Treasurer. The Treasurer shall receive and have charge of all funds and securities of the Corporation. The Treasurer shall deposit the funds to the credit of the Corporation in such depositories as shall be approved from time to time by the Chairman, the President, the Executive Vice President or Vice President responsible for financial matters, or the Treasurer, and the Treasurer shall disburse the same only on written approval of the Controller or the Controller's duly authorized representative, or under such other rules and

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regulations and upon such other disbursement instruments as the Chairman or the Executive Vice President or Vice President responsible for financial matters may adopt or authorize. The Treasurer shall keep full and regular books showing all the Treasurer's receipts and disbursements. Assistant Treasurers shall have such of the authority and perform such of the duties of the Treasurer as may be provided in these By-laws or assigned to them by the Board of Directors or by the Treasurer. During the Treasurer's absence or inability, the Treasurer's authority and duties shall be possessed by such Assistant Treasurer or Assistant Treasurers as the Board of Directors, or the Treasurer upon the approval of the Chairman, the President or the officer responsible for financial matters, may designate. The Treasurer and each Assistant Treasurer shall give such security for the faithful performance of such officer's duties as the Board of Directors may require.

    Section 8. Controller. The Controller shall be the principal accounting officer of the Corporation and shall have custody and charge of all books of account, except those required by the Treasurer in keeping record of the work of the Treasurer's office, and shall have supervision over such subsidiary accounting records as may be kept in departmental offices. The Controller shall have access to all books of account, including the records of the Secretary and the Treasurer, for obtaining information necessary to verify or complete the records of the Controller's office. The Controller or a duly authorized representative shall certify to the authorizations and approvals pertaining to all vouchers; and no payments from the general cash shall be made by the Treasurer except on vouchers bearing the written approval of the Controller or an authorized representative, unless the Board of Directors, the Chairman or other officer responsible for financial matters provides otherwise. Assistant Controllers shall have such of the authority and perform such of the duties of the Controller as may be provided in these By-laws or assigned to them by the Board of Directors or by the Controller. During the Controller's absence or inability, the Controller's authority and duties shall be possessed by such Assistant Controller or Assistant Controllers as the Board of Directors, or the Controller upon the approval of the Chairman, the President or other officer responsible for financial matters may designate.

    Section 9. Other Duties and Authority. Each officer, employee and agent of the Corporation shall have such other duties and authority as may be conferred upon such officer by the Board of Directors or delegated to such officer by the Chairman, the President or the responsible officer.

    Section 10. Removal of Officers. Any officer may be removed at any time by the Board of Directors with or without cause, and such vacancy may be filled by the Board of Directors.

    Section 11. Appointed Officers. The Board of Directors, the Chairman, the President, or the officer responsible for administrative matters may, from time to time, appoint individuals to serve in such designated capacities for the Corporation (such as Vice President, Assistant Vice President, Assistant Secretary, Assistant Treasurer or Assistant Controller) as may be deemed appropriate. Each appointed officer shall perform such duties and shall have such authority as shall be delegated to such officer from time to time by the officer of the Corporation to whom such appointed officer is responsible. Any duty or authority delegated to any appointed officer pursuant to this Section may be withdrawn, with or without cause, at any time by the Board of Directors, the Chairman, the President, the officer responsible for administrative matters or such officer delegating such duty or authority to the appointed officer.

ARTICLE IV

Stock

    Section 1. Issuance of Stock, Stock Certificates. The Board of Directors, and any duly constituted committee of the Board of Directors, shall have the power and authority to issue shares of capital stock of the Corporation, provided, however, that the stock issued by a committee of the Board of Directors shall be issued in connection with a purpose which is within the authority delegated to such committee by the full Board of Directors. The shares of stock of the Corporation may be represented by certificates in such form as may be approved by the Board of Directors, which certificates shall be signed or signed by facsimile by the Chairman or President and the Secretary or Treasurer or an Assistant Secretary or Assistant Treasurer of the Corporation; and which shall be sealed with the seal of the Corporation or a facsimile thereof. Notwithstanding the foregoing provisions regarding share certificates, officers of the Corporation may provide that some or all of any or all classes or series of the Corporation's common or any preferred shares may be uncertificated shares. No share certificate shall be issued until the consideration for such shares has been fully paid or otherwise provided for.

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    Section 2. Transfer of Stock. Shares of stock of the Corporation shall be transferred on the books of the Corporation upon surrender to the Corporation of certificates representing the shares to be transferred accompanied by an assignment in writing of such shares properly executed by the shareholder of record or such shareholder's duly authorized attorney-in-fact and with all taxes on the transfer having been paid. The Corporation may refuse any requested transfer until furnished evidence satisfactory to it that such transfer is proper. The Board of Directors may make such rules concerning the issuance, transfer and registration of stock, the cancellation of stock and certificates, and requirements regarding the replacement of lost, destroyed or wrongfully taken stock certificates (including any requirement of an indemnity bond prior to issuance of any replacement certificate) as it deems appropriate.

    Section 3. Registered Shareholders. The Corporation may deem and treat the holder of record of any stock as the absolute owner for all purposes and shall not be required to take any notice of any right or claim of right of any other person.

    Section 4. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in the case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders is to be taken.

ARTICLE V

Business Combinations

    Section 1. All of the requirements within Part 2 of Article 11 of Chapter 2 of Title 14 of the Official Code of Georgia Annotated, in the form enacted and amended by Georgia Laws, 1985, Page 527, as amended, shall be applicable to business combinations of the Corporation.

    Section 2. All of the requirements within Part 3 of Article 11 of Chapter 2 of Title 14 of the Official Code of Georgia Annotated, in the form enacted by Georgia Laws, 1988, Page 158, as amended, shall be applicable to business combinations of the Corporation.

ARTICLE VI

Seal

    The common seal of the Corporation shall bear within concentric circles the words "BellSouth Corporation" with the word "Seal" in the center. The seal and its attestation may be by facsimile.

ARTICLE VII

Indemnity

    Section 1. Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including any action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Corporation against expenses (including reasonable attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the maximum extent permitted by, and in the manner provided by, the Georgia Business Corporation Code.

    Section 2. The Board of Directors is expressly authorized on behalf of the Corporation to enter indemnity agreements between the Corporation and any director or officer of the Corporation, or any person serving at the request of the Corporation as a director, officer, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or enterprise, in form and content acceptable to the Board and substantially in the form of agreement submitted to and approved by the shareholders of the Corporation. Such agreements may provide that the Corporation shall indemnify such persons and provide for procedural rights intended to assure that appropriate indemnification is available against expenses (including reasonable attorney's fees), judgments, fines

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and amounts paid in settlement actually and reasonably incurred by such persons in connection with such action, suit or proceeding. No indemnification may be made for liability (i) for any appropriation, in violation of a director's duties, of any business opportunity of the Corporation, (ii) for acts or omissions not in good faith or constituting intentional misconduct or a knowing violation of law, (iii) for the types of liability set forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for any transaction from which the person derived an improper personal benefit.

ARTICLE VIII

Amendment of By-laws

    The Board of Directors shall have the power to alter, amend or repeal the By-laws or adopt new by-laws, but any by-laws adopted by the Board of Directors may be altered, amended or repealed and new by-laws adopted by the shareholders. The shareholders may prescribe that any by-law or by-laws adopted by them, including, without limitation, a by-law establishing the number of Directors, shall not be altered, amended or repealed by the Board of Directors. Action by the Board of Directors with respect to the By-laws shall be taken by an affirmative vote of a majority of all of the Directors then in office. Action by the shareholders with respect to the By-laws shall be taken by an affirmative vote of a majority of the voting power of the shares entitled to vote at an election of Directors.

    Notwithstanding the preceding sentence, the affirmative vote of the holders of at least 75% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single voting group, shall be required to amend or repeal, or adopt any provision inconsistent with, Section 2 or 13 of Article II of these By-laws, or this sentence.

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QuickLinks

CONTENTS
BY-LAWS OF BELLSOUTH CORPORATION ARTICLE I Shareholders
ARTICLE II Directors
ARTICLE III Officers
ARTICLE IV Stock
ARTICLE V Business Combinations
ARTICLE VI Seal
ARTICLE VII Indemnity
ARTICLE VIII Amendment of By-laws

EX-10.GG

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Exhibit 10gg

AGREEMENT

    THIS AGREEMENT is made and entered into this 18th day of October, 2000, by and between BellSouth Corporation, a Georgia corporation ("Company"), and Francis A. Dramis ("Executive"):

Reasons for this Agreement.  Company has identified Executive as an individual with significant skills and experience critical to the business of Company. In view of the significant and growing demand for executive talent, the potential impact on Company's executives of the transformational changes occurring within our industry and company, and the need to ensure continuity of Company's senior executive team, Company desires to provide Executive through this Agreement with certain incentives to remain in Company's employment. This Agreement is also designed to provide additional motivation for meeting Company's goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive's activities designed to protect Company's interests should Executive's employment terminate.

    Executive has been employed by Company and its Affiliated Companies since December 1998 and serves as Company's Chief Information and E-Commerce Officer, reporting to Company's Chairman. Executive has responsibility for all information technology for Company and Affiliated Companies, and for corporate-wide strategies for information technology functions. Executive acknowledges that Company and Affiliated Companies have disclosed or made available Confidential Information to Executive which could be used by Executive to Company's or Affiliated Companies' detriment. In addition, in connection with his employment, Executive has developed important relationships and contacts with employees valuable to Company and Affiliated Companies.

    Executive further acknowledges that the covenant not to compete and other restrictive covenants in this Agreement are fair and reasonable, that enforcement of the provisions of this Agreement will not cause him undue hardship, and that the provisions of this Agreement are reasonably necessary and commensurate with the need to protect Company and Affiliated Companies and their business interests and property from irreparable harm.

Agreement.  In consideration of the mutual promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and Company agree as follows:

    1.Restricted Shares Award.  In connection with execution of this Agreement, Company shall grant to Executive an award of one hundred thousand (100,000) restricted shares of Company's common stock (such award being referred to in this Agreement as the "Restricted Shares Award"). The Restricted Shares Award shall be granted pursuant to an agreement (the "Restricted Shares Award Agreement") substantially identical to the BellSouth Corporation Restricted Shares Award Agreement attached hereto as Exhibit "A" and incorporated by this reference herein.

    2.Minimum SERP Benefit; Post-Retirement Medical Benefits.  In the event Executive attains the age of fifty-eight (58) while still employed by Company:

    (a) in determining the amount of benefits payable with respect to Executive under SERP, Executive shall be entitled to benefits equal to the greater of:

(i)

an aggregate annual benefit based on forty-five percent (45%) of "Included Earnings" (as such term is defined in SERP), increased by two (2) percentage points for each additional year of "Net Credited Service" (as such term is defined in SERP) earned by Executive after the year in which his fifty-eighth (58^th) birthday occurs (such percentage not to exceed, however, in the aggregate seventy percent (70%) of Included Earnings), instead of the formula described in section 4.4(a)(i)(A) of SERP; and



(ii)

the benefit provided to Executive under SERP without regard to this Section 2(a).


         Except as otherwise provided in this Section 2(a), all other terms and conditions of SERP shall govern Executive's entitlement to benefits thereunder. In the event SERP shall be amended or restated or redesigned, benefits payable with respect to Executive under such amended, restated or redesigned plan shall include a benefit enhancement designed to approximate as nearly as reasonably possible the SERP benefit enhancement described in this Section 2(a).

and

    (b) if Executive's employment is subsequently terminated at a time when Executive has not yet satisfied age and service requirements for eligibility for Company-provided post-retirement medical benefits, Executive shall be entitled to post-retirement medical benefits from Company comparable to the coverage provided by Company's medical benefits plan(s) to similarly situated employees who do retire eligible for such post-retirement coverage. Such benefits shall be administered under procedures implemented by Company from time to time with respect to such special post-retirement benefits.

    3.Termination Allowance.  In the event Executive's employment is terminated under circumstances described below in this Section 3, Company shall pay to Executive a termination allowance. The termination allowance shall be an amount equal to the sum of (i) two hundred percent (200%) of Executive's Base Salary in effect on the date of Executive's termination of employment, plus (ii) two hundred percent (200%) of the standard award amount applicable to Executive under the BellSouth Short Term Incentive Award Plan ("STIAP") for the year in which his date of termination occurs, less all applicable withholdings, payable in a single lump sum payment. Payment of the termination allowance shall be made as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment.

    For purposes of this Agreement, "Base Salary" shall refer to the gross annual base salary payable to Executive including (i) the amounts of any before-tax contributions made by Executive from such salary to the BellSouth Retirement Savings Plan, or any other tax-qualified cash or deferred arrangement sponsored by Company, and (ii) the amount of any other deferrals of such salary under any nonqualified deferred compensation plan(s) maintained by Company.

    Executive's employment shall be deemed to have been terminated under circumstances described in this Section 3 only if all of the following conditions are satisfied:

(A)

Executive's employment is terminated either (1) by Company, other than for Cause, or (2) by Executive for Good Reason; and



(B)

Executive executes a release satisfying the terms of Section 6(b) of this Agreement; and



(C)

Executive executes an agreement regarding competition with Company and Affiliated Companies satisfying the terms of Section 9(b) of this Agreement; and



(D)

Executive is not transferred to or reemployed by an Affiliated Company.

    4.Vesting of Executive Benefits.  In the event Executive's employment is terminated under circumstances described in Section 3 of this Agreement, all benefits of Executive under the BellSouth Corporation Nonqualified Deferred Compensation Plan, the BellSouth Nonqualified Deferred Income Plan, the BellSouth Split-Dollar Life Insurance Plan, the BellSouth Supplemental Life Insurance Plan, and the SERP, shall be determined as if Executive, upon his termination of employment, had been eligible for a service pension under the terms and conditions of the BellSouth Personal Retirement Account Pension Plan. This provision shall be disregarded in determining benefits of (or with respect to) Executive under any other Company-sponsored compensation or benefit plan or program, including without limitation the Stock Plan.

    5.Non-Vested Stock Options.  In the event Executive's employment is terminated under circumstances described in Section 3 of this Agreement, Company shall pay to Executive an amount with respect to all Options (as such term is defined in the Stock Plan) to acquire Company stock which are forfeited by virtue of having not been vested and exercisable at the time of such termination of employment, determined:

(i)

by multiplying the number of Options in each such grant by the amount, if any, by which the Fair Market Value of Company's common stock subject to the Option exceeds the exercise price of those Options; and



(ii)

by then multiplying the amount determined in (i) above with respect to each such Option grant by a fraction, the numerator of which is the number of whole calendar months which shall have elapsed from the grant date of such Option through the date of Executive's employment termination date, and the denominator of which is the number of calendar months in the full vesting period applicable to such grant.

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    Payment of the amount so determined, less all applicable withholdings, shall be made in a single lump sum payment as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment.

    For purposes of this Agreement, "Fair Market Value" shall mean the average of the high and low sales prices of one share of Company stock subject to the Option on the New York Stock Exchange for the last business day (on which the New York Stock Exchange operates and is open to the public for trading) of each of the three (3) months preceding the month in which Executive's termination of employment occurs.

    6.Discharge and Waiver.  (a) Executive fully releases and forever discharges Company and Affiliated Companies, and any employee, officer, director, representative, agent, successor or assign of Company and Affiliated Companies (both in their personal and official capacities), and all persons acting by, through and under or in concert with any of them, from any and all claims, demands, causes of action, remedies, obligations, costs and expenses of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, through the date of this Agreement, including those arising from or in connection with the terms and conditions of employment with Company (and Affiliated Companies). This paragraph is not intended to and shall not affect benefits to which Executive may be entitled under any pension, savings, health, welfare, or other benefit plan in which Executive is a participant.

    (b) Furthermore, Company's obligations under this Agreement upon termination of Executive's employment, and Executive's entitlement to any such benefits, are expressly conditioned upon execution by Executive, upon termination of his employment, of a release agreement substantially in the form of the release agreement attached to this Agreement as Exhibit "B," which is incorporated herein by this reference.

    7.Covenant Not to Sue.  Executive covenants and agrees not to make or file any claim, demand or cause of action or seek any remedy of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, arising from or in connection with the matters discharged and waived in Section 6, above.

    8.Confidential Information.  Executive agrees to protect Confidential Information. Executive will not use, except in connection with work for Company or Affiliated Companies, threaten to use, disclose or threaten to disclose, give or threaten to give to others any Confidential Information. For purposes of this Agreement, "Confidential Information" shall mean information, whether generated internally or externally, relating to Company's business or to Affiliated Companies' businesses which derives economic value, actual or potential, from not being generally known to other Persons and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality, including, but not limited to, studies and analyses, technical or nontechnical data, programs, patterns, compilations, devices, methods, models (including cost and/or pricing models and operating models), techniques, drawings, processes, employee compensation data, and financial data (including marketing information and strategies and personnel data). For purposes of this Agreement, Confidential Information does not include information which is not a trade secret three (3) years after termination of Executive's employment with Company, but shall continue to include trade secrets as long as information remains a trade secret under applicable law.

    9.Employment with Competitors.  (a) While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive agrees not to provide services (as more fully described below) in competition with Company or any Affiliated Company to any person or entity which provides products or services identical to or similar to products and services provided by Company or Affiliated Companies in the same market(s), whether as an employee, consultant, independent contractor or otherwise, within the Territory.

    For purposes of this Agreement, the term "Territory" shall mean the territory in which Executive provides services to Company and Affiliated Companies, consisting of those portions of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee, and those additional markets listed on Exhibit "C" attached hereto and incorporated herein by this reference, in which Company or Affiliated Companies are engaged in business. Executive agrees that because of the widespread nature of Company's business, breach of this Agreement by engaging in competitive activity anywhere in this broad Territory would

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irreparably injure Company or Affiliated Companies and that, therefore, a more limited geographic restriction is neither feasible nor appropriate.

    The services which Executive has provided to Company and Affiliated Companies, and which Executive shall be prohibited from providing in competition with Company or Affiliated Companies in accordance with the terms of this Agreement shall be information technology management, planning, administration, or other participation in or providing advice with respect to the communications services business, including without limitation all forms of wireline (including without limitation local exchange, exchange access and intraLATA toll) telecommunications services, systems and products, all forms of wireless (including without limitation cellular, personal communications service, and mobile data) communications services, systems and products, all forms of electronic commerce or communications including internet and other web based applications, data transmission and networking, entertainment services, systems and products, paging services, systems and products, and advertising and publishing, to the extent engaged in by Company and Affiliated Companies on the date of this Agreement.

    Executive represents to Company that Executive's education, training and experience are such that this covenant not to compete will not jeopardize or significantly interfere with Executive's ability to secure other gainful employment.

    (b) After Executive's termination of employment, Company's obligation to provide any of the benefits, entitlements or payments described in this Agreement or in the Restricted Shares Award Agreement are expressly conditioned upon execution by Executive of an agreement, in form and substance reasonably acceptable to Company, and reflecting terms substantially identical to the terms of Section 9(a) of this Agreement updated, however, to reflect, as of the date of Executive's termination of employment, (i) the products and services provided by Company and Affiliated Companies, (ii) the territory in which such products and services are provided by Company and Affiliated Companies, and (iii) the nature of the services provided, and activities engaged in, by Executive, on behalf of Company and Affiliated Companies. Upon execution of such agreement, the provisions of Section 9(a) of this Agreement shall thereafter be void.

    (c) In the event that Executive either (i) fails or refuses to execute an agreement satisfying the terms of Section 9(b) of this Agreement following his termination of employment, or (ii) fails to comply with the terms of Section 9(a), the agreement described in Section 9(b), or Section 10 of this Agreement, then, in addition to all other rights and remedies available to Company and Affiliated Companies under this Agreement or at law or in equity:

(A)

all amounts otherwise payable by Company or an Affiliated Company to (or on behalf of) Executive pursuant to the terms of this Agreement for periods subsequent to the date of termination of employment, with regard to clause (i) above, or of such failure, with regard to clause (ii) above, as the case may be, shall be forfeited and Company and Affiliated Companies shall cease to be under any further obligation to Executive with respect to the compensation and benefits described in this Agreement;



(B)

Executive shall refund to Company promptly any and all amounts previously paid to or on behalf of Executive pursuant to the terms of this Agreement for periods subsequent to the occurrence of any event described in clause (ii) above of this Section 9(c); and



(C)

Executive shall promptly return to Company all shares of Company's common stock delivered to Executive pursuant to the Restricted Shares Award plus, if any of such shares shall have been previously disposed of, a cash amount equal to the proceeds from such disposition (or the fair market value of such shares on the date of such disposition, if disposed of for less than fair market value).

    10.Hiring or Solicitation of Company Employees.  While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive will not hire or induce or attempt to induce or solicit to leave employment with Company or Affiliated Companies, for himself or on behalf of any other Person, anyone who is or was, during Executive's employment with Company, an employee of Company or Affiliated Companies. However, Executive may offer employment on behalf of himself or on behalf of any company or entity to any such employee who terminated his or her employment without any inducement or attempted inducement or solicitation by Executive.

    11.Interpretation; Severability of Invalid Provisions.  Executive acknowledges and agrees that the limitations described in this Agreement, including specifically the limitations upon his activities, are reasonable in

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scope, are necessary for the protection of Company's and Affiliated Companies' business, and form an essential part of the consideration for which this Agreement has been entered into. It is the intention of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under applicable laws and public policies. Nonetheless, the rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect. The provisions of this Agreement do not in any way limit or abridge Company's or Affiliated Companies' rights under the laws of unfair competition, trade secret, copyright, patent, trademark or any other applicable law(s), all of which are in addition to and cumulative of Company's or Affiliated Companies' rights under this Agreement. Executive agrees that the existence of any claim by Executive against Company or any Affiliated Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Company or any Affiliated Company of any or all of such provisions or covenants.

    12.Relief.  The parties acknowledge that a breach or threatened breach by Executive of any of the terms of this Agreement would result in material and irreparable damage and injury to Company or Affiliated Companies, and that it would be difficult or impossible to establish the full monetary value of such damage. Therefore, Company and Affiliated Companies shall be entitled to injunctive relief in the event of Executive's breach or threatened breach of any of the terms contained in this Agreement. In the event of any breach of this Agreement by Executive, if Company or any Affiliated Company should employ attorneys or incur other expenses for the enforcement of any obligation or agreement of Executive contained herein, Executive agrees that, on demand and to the extent permitted by law, Executive shall reimburse Company or the Affiliated Company for its reasonable attorneys' fees and such other reasonable expenses so incurred.

    13.Arbitration.  Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof (collectively, a "Claim") shall be settled by arbitration pursuant to the rules of the American Arbitration Association. Any such arbitration shall be conducted by one arbitrator, with experience in the matters covered by this Agreement, mutually acceptable to the parties. If the parties are unable to agree on the arbitrator within thirty (30) days of one party giving the other party written notice of intent to arbitrate a Claim, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration. The decision of the arbitrator in any such arbitration shall be conclusive and binding on the parties. Any such arbitration shall be conducted in Atlanta, Georgia.

    14.Agreement Binding.  This Agreement shall be binding upon and inure to the benefit of Company and Affiliated Companies, and their successors, assignees, and designees, and Executive and Executive's heirs, executors, administrators, personal representatives and assigns.

    15.Entire Agreement; Previous Agreement.  This Agreement contains the entire agreement between the parties and no statements, promises or inducements made by any party hereto, or agent of either party, which are not contained in this Agreement shall be valid or binding; provided, however, that the matters dealt with herein supersede previous written agreements between the parties on the same subject matters only to the extent such previous provisions are inconsistent with this Agreement and other provisions in written agreements between the parties not inconsistent with this Agreement are not affected. This Agreement may not be enlarged, modified or altered except in writing signed by the parties.

    16.Nonwaiver.  The failure of Company or any Affiliated Companies to insist upon strict performance of the terms of this Agreement, or to exercise any option herein, shall not be construed as a waiver or a relinquishment for the future of such term or option, but rather the same shall continue in full force and effect.

    17.Notices.  All notices, requests, demands and other communications required or permitted by this Agreement or by any statute relating to this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first-class, certified mail, postage prepaid, addressed as follows:

To Company:  Charles R. Morgan
Executive Vice President and General Counsel
BellSouth Corporation
2002 Campanile
1155 Peachtree Street, N.E.
Atlanta, GA 30309

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To Executive:  Francis A. Dramis
9430 Colonnade Trail
Alpharetta, GA 30022
(or such other address as shall be provided by Executive to Company from time to time)

    18.Pooling of Interests Accounting Treatment.  Notwithstanding anything to the contrary in this Agreement, if the application of any provision(s) of this Agreement, including without limitation the Restricted Shares Award described in Section 1, would preclude the use of pooling of interests accounting treatment with respect to a transaction for which such treatment otherwise is available and to be adopted by Company, this Agreement shall be modified as it applies to such transaction, to the minimum extent necessary to prevent such impact, including if necessary the invalidation of such provisions (or the entire Agreement, as the case may be). If the pooling of interests accounting rules require modification or invalidation of one or more provisions of this Agreement as it applies to such transaction, the adverse impact on the Executive shall, to the extent reasonably possible, be proportionate to the adverse impact on other similarly situated employees of Company. The Board of Directors of Company shall, in its sole and absolute discretion, make all determinations necessary under this Section; provided, that determinations regarding the application of the pooling of interests accounting rules for these purposes shall be made by Company, with the concurrence of Company's independent auditors at the time such determination is to be made.

    19.Nonduplication.  Notwithstanding any other provisions of this Agreement, if Executive becomes entitled to benefits under Article III of the CIC Agreement, (i) the severance benefits described in Article III(a) of the CIC Agreement shall be in lieu of any termination allowance to which Executive is otherwise entitled under Section 3 of this Agreement; (ii) Article III(d) of the CIC Agreement shall apply in lieu of the provisions of Section 4 of this Agreement; and (iii) Article IV of the CIC Agreement shall apply in lieu of the provisions of Section 5 of this Agreement. Except as otherwise specifically provided in this Section 19, both this Agreement and the CIC Agreement shall continue in full force and effect, and Article X(e) of the CIC Agreement shall be interpreted consistently herewith.

    20.Nondisclosure.  Executive shall not disclose the existence or terms of this Agreement to any third party (excluding Executive's spouse and children), except to receive advice of legal counsel, financial advisors or tax advisors (who shall also be required to maintain its confidentiality) or to comply with any statutory or common law duty; provided that these restrictions on disclosure shall not apply to the extent that the existence of this Agreement are disclosed by Company or any Affiliated Company as part of its periodic public filings and disclosures or otherwise.

    21.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

    22.Governing Law.  This Agreement shall be construed under and governed by the laws of the State of Georgia. Executive has been advised to consult with an attorney, acknowledges having had ample opportunity to do so and fully understands the binding effect of this Agreement. In this regard, Executive acknowledges that a copy of this Agreement was provided to Executive for review and consideration for up to twenty-two (22) days. Further, Executive understands that this Agreement may be revoked by Executive within seven (7) days from the date of execution of this Agreement.

    23.Definitions.  For purposes of this Agreement, the following terms shall have the meaning specified below:

    (a) "Affiliated Companies"—shall mean Company and each entity in respect of which Company owns directly or indirectly (i) with respect to a corporation, stock that represents at least ten (10%) percent of the total combined voting power of all classes of stock in the corporation in connection with the election of directors of such corporation, or (ii) in the case of a joint venture, partnership, limited liability company or similar entity, and interest of at least ten (10%) percent in the capital or profits of such entity.

    (b) "Base Salary"—shall have the meaning ascribed to such term in Section 3 of this Agreement.

    (c) "Cause"—shall mean Executive's (i) engaging in an act (or acts) of willful dishonesty involving Company or Affiliated Companies or their business(es) that is demonstrably injurious to Company or Affiliated Companies;

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(ii) refusal or failure to follow reasonable instructions of Company's Chief Executive Officer or Board of Directors; or (iii) conviction of a crime classified as a felony.

    (d) "CIC Agreement"—the Executive Severance Agreement entered into by and between Executive and Company on December 1, 1998, providing certain benefits in the event of a change in corporate control of Company, as amended from time to time.

    (e) "Confidential Information"—shall have the meaning ascribed to such term in Section 8 of this Agreement.

    (f) "Fair Market Value"—shall have the meaning ascribed to such term in Section 5 of this Agreement.

    (g) "Good Reason"—shall mean, without Executive's express written consent a reduction in Executive's Base Salary, or his compensation band, as in effect immediately prior to such reduction, or the failure to pay a bonus award to which Executive is otherwise entitled under any of the short term or long term incentive plans in which Executive participates (or any successor incentive compensation plans) at the time such awards are usually paid.

    (h) "Person"—shall mean any individual, corporation, bank, partnership, joint venture, association, joint stock company, trust, unincorporated organization, governmental or other legal or business entity.

    (i) "Restricted Shares Award"—shall have the meaning ascribed to such term in Section 1 of this Agreement.

    (j) "Restricted Shares Award Agreement"—shall have the meaning ascribed to such term in Section 1 of this Agreement.

    (k) "SERP"—the BellSouth Corporation Supplemental Executive Retirement Plan, as amended from time to time.

    (l) "Stock Plan"—the BellSouth Corporation Stock Plan and related award agreements, as amended from time to time.

    (m) "Territory"—shall have the meaning ascribed to such term in Section 9 of this Agreement.

IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly authorized representative, and Executive has executed this Agreement, as of the date written above.

EXECUTIVE:	BELLSOUTH CORPORATION:
/s/ FRANCIS A. DRAMIS FRANCIS A. DRAMIS	By:	/s/ RICHARD D. SIBBERNSEN
	Title: Vice President—Human Resources

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AGREEMENT

EX-10.GG-1

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Exhibit 10gg-1

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD AGREEMENT

    BellSouth Corporation ("BellSouth") and Francis A. Dramis ("Executive"), in consideration of the mutual covenants set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, hereby agree to the terms of this Restricted Shares Award Agreement ("Agreement") effective as of October 18, 2000:

    1. Award Grant. BellSouth, acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to Executive, and Executive hereby accepts, one hundred thousand (100,000) Restricted Shares of BellSouth Corporation $1.00 par value common stock (the "Shares"), effective as of the date above. This Award is subject to the terms and conditions of this Agreement, to the further terms and conditions applicable to Restricted Shares as set forth in the Plan and to applicable terms and conditions regarding change in control in the Executive Severance Agreement dated December 1, 1998, between BellSouth and Executive (the "CIC Agreement").

    2. Restriction Period.

    (a) Vesting Schedule. Executive's interest in the Shares shall vest in accordance with the following schedule:

Vesting Date	Number of Shares
October 1, 2003	thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2004	an additional thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2005	the remaining thirty-three thousand three hundred thirty-four (33,334) shares

    (b) Death or Disability. Executive's interest in the Shares also will vest upon any earlier termination of employment by Executive with the Company or any Subsidiary, or any employer described in paragraph 9 (also referred to herein as a "Subsidiary"), by reason of (i) death or (ii) disability, provided as a result of such disability Executive is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Executive's employer which BellSouth determines to be comparable to such disability benefits.

    (c) Change in Control. Executive's interest in the Shares also will vest at any earlier time upon which Executive's general executive benefits vest under paragraph (d) of Article III of the CIC Agreement in the same manner as if Executive's interest in the Shares was specifically listed in such paragraph (d).

    (d) Forfeiture. In the event Executive terminates employment with BellSouth and its Subsidiaries before his interest in the Shares is fully vested under this Paragraph (2) above, Executive shall forfeit all of his interest in the Shares to the extent not then vested.

    3. Share Certificates. The certificates for the Shares (the "Certificates") shall be registered in the name of Executive. Executive, immediately upon receipt of the Certificates, shall execute with BellSouth an escrow agreement provided by BellSouth for this purpose substantially in the form attached hereto (the "Escrow Agreement") and deposit the Certificates with the escrow agent under such agreement (the "Escrow Agent") together with stock powers appropriately endorsed in blank. After Executive becomes vested in Shares as provided in Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of vested Shares to Executive (or to his Beneficiary or his legal representative, if appropriate). In the event of Executive's forfeiture of Shares under Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of forfeited Shares to BellSouth.

    4. Stockholder Status. Executive shall have all of the rights of a stockholder with respect to the Shares prior to any forfeiture, including the right to vote the Shares and to receive all regular cash dividends paid with respect to the Shares, subject to terms of this Agreement, the Escrow Agreement and the Plan. Notwithstanding the above, Executive shall have no right to sell, assign, transfer, exchange or encumber or make subject to any creditor's process, whether voluntary or involuntary or by operation of law, any of his interest in Shares to the extent not then vested under Paragraph 2 above, and any attempt to do so shall be of no effect. In addition, all shares of capital

stock or other securities issued with respect to or in substitution of any Shares not then vested under Paragraph 2 above, whether by BellSouth or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of BellSouth, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to the terms and conditions of this Agreement.

    5. Employment and Termination. Neither the Plan, this Agreement nor the Escrow Agreement shall give Executive the right to continued employment by BellSouth or by any Subsidiary or shall adversely affect the right of any such company to terminate Executive's employment with or without cause at any time.

    6. Securities Law Restrictions. Executive certifies that he is acquiring the Shares for his own account and that he has no present intention to sell or otherwise dispose of any of the Shares. Executive acknowledges that the Shares shall be subject to such restrictions and conditions on any resale and on any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light of any stock exchange requirements and that the Certificates shall bear legends as determined to be appropriate by BellSouth.

    7. Tax Withholding. BellSouth or any Subsidiary shall have the right to withhold from any payment to Executive, require payment from the Executive, or take such other action which such company deems necessary to satisfy any income or other tax withholding or reporting requirements arising from this Award of Restricted Shares, and Executive shall provide to any such company such information, and pay to it upon request such amounts, as it determines are required to comply with such requirements.

    8. Jurisdiction and Venue. Executive consents to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit, action, or other proceeding relating to this Agreement or the Escrow Agreement, including the enforcement of any rights under this Agreement or the Escrow Agreement and any process or notice of motion in connection with such situation or other proceeding may be serviced by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

    9. Certain Employment Transfers. In the event Executive is transferred to any company or business in which BellSouth directly or indirectly owns an interest but which is not a "subsidiary" as defined in the Plan, then Executive shall not be deemed to have terminated his employment under this Agreement until such time, if any, as Executive terminates employment with such organization and, if applicable, fails to return to BellSouth or a Subsidiary in accordance with the terms of Executive's assignment, or Executive otherwise fails to meet the terms of Executive's assignment, at which time Executive's deemed termination of employment shall be treated in the same manner as a termination of employment from BellSouth or a Subsidiary under this Agreement.

    10. Miscellaneous

    (a) Executive's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.

    (b) This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and, unless defined in this Agreement, any capitalized terms in this Agreement shall have the same meaning assigned to those terms under the Plan.

    (c) The Plan and this Agreement shall be governed by the laws of the State of Georgia.

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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BELLSOUTH CORPORATION:
By:	/s/ RICHARD D. SIBBERNSEN
EXECUTIVE:
	/s/ FRANCIS A. DRAMIS FRANCIS A. DRAMIS

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD AGREEMENT

EX-10.GG-2

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Exhibit 10gg-2

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD
ESCROW AGREEMENT

    This Escrow Agreement, effective October 18, 2000, by and among BellSouth Corporation (the "Corporation"), Francis A. Dramis (the "Executive") and The Chase Manhattan Bank, as escrow agent (the "Escrow Agent").

WITNESSETH THAT:

    WHEREAS, the Corporation has, pursuant to the BellSouth Corporation Stock Plan (the "Plan"), made an award of restricted shares of common stock of the Corporation to the Executive in recognition of the Executive's anticipated service to be rendered to the Corporation; and

    WHEREAS, such shares are subject to certain restrictions under the Plan and the terms of the Restricted Shares Award Agreement between the Corporation and the Executive dated the date hereof (the "Award Agreement"); and

    WHEREAS, in order to record the delivery of the certificates for such shares and to enforce such restrictions, the certificates are being deposited together with stock powers appropriately endorsed in blank with the Escrow Agent hereunder; and

    WHEREAS, the Corporation and the Executive desire to execute this Escrow Agreement with the Escrow Agent in order to record the terms and conditions under which such certificates have been delivered to the Escrow Agent and under which the certificates will be delivered by the Escrow Agent to Executive or the Corporation;

    NOW THEREFORE, the Corporation, the Executive and the Escrow Agent agree as follow:

    1. Receipt by the Executive. The Executive acknowledges receipt from the Corporation of certificates for shares (the "Shares") of its common stock as follows:

Certificate Number	Number of Shares
BLS	33,333
BLS	33,333
BLS	33,334

    2. Investment Representation and Certificate Legend. The Executive, by the Executive's execution of this Agreement, certifies to the Corporation that (a) the Shares received by the Executive have been received for the Executive's own account, and the Executive has no present intention to sell or otherwise dispose of any of the Shares and (b) the Executive is aware that the transfer of the Shares is restricted as indicated on the legend on the certificates for the Shares.

    3. Delivery to and Receipt by the Escrow Agent. The Executive hereby delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt from the Executive, of such certificates for the Shares, registered in the name of the Executive, in each case accompanied by stock powers executed in blank by the Executive covering all of the Shares.

    4. Delivery by the Escrow Agent. Subject to the other terms of the Plan, the Award Agreement and this Escrow Agreement, the Executive shall become entitled to redelivery of the Shares in accordance with the following schedule:

On or After This Date	The Executive shall be Entitled to the Following Number of Shares
October 1, 2003	33,333
October 1, 2004	33,333
October 1, 2005	33,334

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The Executive acknowledges and agrees that if the Executive forfeits any shares under the Award Agreement, then all such forfeited Shares shall be returned to the Corporation and all rights of the Executive with respect to those Shares shall cease.

    The Escrow Agent shall deliver the certificates for the Shares to the Executive or to the Corporation in accordance with the written instructions of the Committee (as defined in the Plan) or an officer of the Corporation responsible for human resources matters (but in no event the Executive). Such instructions shall be issued in accordance with the provisions of the Plan, the Award Agreement and this Agreement. The Escrow Agent shall not be responsible for the propriety of any such instruction and will be fully protected in making or omitting to make any delivery in accordance with such instructions.

    5. Distributions; Release; Voting. The Executive shall be entitled to receive all regular cash dividends paid upon and voting rights with respect to all of the Shares held hereunder from time to time. All shares of capital stock or other securities issued with respect to or in substitution of any of the Shares not yet vested and held hereunder from time to time, whether by the Corporation or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of the Corporation, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to all of the terms and conditions of this Escrow Agreement and shall be redelivered to the Executive or delivered to the Corporation under the same circumstances as the portion of the Shares with respect to, or in substitution for, which they were issued. Any such cash received shall be invested in the Escrow Agent's Money Management Account.

    6. Reliance by the Escrow Agent. The Escrow Agent will be under no duties whatsoever, except such duties as are specifically set forth as such in this Escrow Agreement, and no implied covenant or obligation contrary to the terms of this Agreement will be read into this Escrow Agreement against the Escrow Agent. The Escrow Agent will be under no liability or obligation to anyone with respect to any failure on the part of the Corporation, the Committee or the Executive to perform any of their respective obligations under the Plan, the Award Agreement, or under the terms of this Agreement, or for any error or omission whatsoever on the part of the Committee, the Corporation or the Executive. The Escrow Agent shall have no liability for acting in reliance upon any instructions delivered to it and believed in good faith by it to be from the Committee or the Corporation with respect to matters for which they are responsible under the Plan and this Agreement. The Escrow Agent will be under no obligation to interpret Plan provisions, but may rely entirely upon the interpretation of the Plan by the Committee or an officer of the Corporation responsible for human resources (but in no event the Executive).

    7. Resignation. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving notice in writing of such resignation to the Corporation 180 days in advance of the date when such resignation shall take effect. The Corporation shall have the right to appoint a new escrow agent hereunder.

    8. Compensation. The Corporation hereby agrees to pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in connection with carrying out its duties hereunder.

    9. Indemnification. The Corporation hereby agrees to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Escrow Agent, arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including the costs and expenses of defending itself against any claim of liability.

    10. Notices. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if sent by registered mail, return receipt requested, as follows:

The Chase Manhattan Bank
Corporate Trust Department
450 West 33^rd Street, 15^th Floor
New York, New York 10001

BellSouth Corporation
1155 Peachtree Street, N.E., Suite 1800
Atlanta, Georgia 30309-3610

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    To the Executive at the address shown below or at such other address as any of the above may have furnished to the other parties in writing by registered mail, return receipt requested.

    11. Binding Effect. This Escrow Agreement shall be binding upon and inure to the benefit of the Corporation, the Executive and the Escrow Agent and their respective heirs, representatives, successors and assigns.

Francis A. Dramis
	Signature:	/s/ FRANCIS A. DRAMIS
	Mailing Address:	9430 Colonnade Trail Alpharetta, GA 30022
	Social Security No.:	###-##-####
BellSouth Corporation
	By:	/s/ RICHARD D. SIBBERNSEN
	Attest:	/s/ MARCY A. BASS
The Chase Manhattan Bank
	By:	/s/ BARRY A. SHAPIRO
	Attest:	/s/ OLIVA MELENDEZ

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD ESCROW AGREEMENT
WITNESSETH THAT:

EX-10.HH

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Exhibit 10hh

AGREEMENT

    THIS AGREEMENT is made and entered into this 26th day of October, 2000, by and between BellSouth Corporation, a Georgia corporation ("Company"), and Ronald M. Dykes ("Executive"):

Reasons for this Agreement. Company has identified Executive as an individual with significant skills and experience critical to the business of Company. In view of the significant and growing demand for executive talent, the potential impact on Company's executives of the transformational changes occurring within our industry and company, and the need to ensure continuity of Company's senior executive team, Company desires to provide Executive through this Agreement with certain incentives to remain in Company's employment. This Agreement is also designed to provide additional motivation for meeting Company's goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive's activities designed to protect Company's interests should Executive's employment terminate.

    Executive has been employed by Company and its Affiliated Companies since 1971 and, during his tenure, has served in a variety of senior capacities. Executive assumed his current position as Chief Financial Officer in 1995. Executive is responsible for all financial matters and investor relations for Company and all Affiliated Companies and reports to Company's Chairman.

    Executive acknowledges that Company and Affiliated Companies have disclosed or made available Confidential Information to Executive which could be used by Executive to Company's or Affiliated Companies' detriment. In addition, in connection with his employment, Executive has developed important relationships and contacts with employees valuable to Company and Affiliated Companies.

    Executive further acknowledges that the covenant not to compete and other restrictive covenants in this Agreement are fair and reasonable, that enforcement of the provisions of this Agreement will not cause him undue hardship, and that the provisions of this Agreement are reasonably necessary and commensurate with the need to protect Company and Affiliated Companies and their business interests and property from irreparable harm.

Agreement. In consideration of the mutual promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and Company agree as follows:

    1. Restricted Shares Award. In connection with execution of this Agreement, Company shall grant to Executive an award of one hundred thousand (100,000) restricted shares of Company's common stock (such award being referred to in this Agreement as the "Restricted Shares Award"). The Restricted Shares Award shall be granted pursuant to an agreement (the "Restricted Shares Award Agreement") substantially identical to the BellSouth Corporation Restricted Shares Award Agreement attached hereto as Exhibit "A" and incorporated by this reference herein.

    2. Minimum SERP Benefit. In determining the amount of benefits payable with respect to Executive under SERP, upon attainment by Executive of the age of fifty-eight (58) while still employed by Company, Executive shall be entitled to benefits equal to the greater of:

(i)

an aggregate annual benefit based on (A) sixty percent (60%) of "Included Earnings" (as such term is defined in SERP), increased by two (2) percentage points for each additional year of "Net Credited Service" (as such term is defined in SERP) earned by Executive after the year in which his fifty-eighth (58^th) birthday occurs (such percentage not to exceed, however, in the aggregate seventy percent (70%) of Included Earnings), instead of the formula described in section 4.4(a)(i)(A) of SERP, and (B) no early retirement discount, instead of the otherwise applicable early retirement discount described in section 4.4(c) of SERP; and



(ii)

the benefits provided to Executive under SERP without regard to this Section 2.

    Except as otherwise provided in this Section 2, all other terms and conditions of SERP shall govern Executive's entitlement to benefits thereunder. In the event SERP shall be amended or restated or redesigned, benefits payable with respect to Executive under such amended, restated or redesigned plan shall include a benefit enhancement designed to approximate as nearly as reasonably possible the SERP benefit enhancement described in this Section 2.

    3. Termination Allowance. In the event Executive's employment is terminated under circumstances described below in this Section 3, Company shall pay to Executive a termination allowance. The termination allowance shall be an amount equal to the sum of (i) two hundred percent (200%) of Executive's Base Salary in effect on the date of Executive's termination of employment, plus (ii) two hundred percent (200%) of the standard award amount applicable to Executive under the BellSouth Short Term Incentive Award Plan ("STIAP") for the year in which his date of termination occurs, less all applicable withholdings, payable in a single lump sum payment. Payment of the termination allowance shall be made as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment.

    For purposes of this Agreement, "Base Salary" shall refer to the gross annual base salary payable to Executive including (i) the amounts of any before-tax contributions made by Executive from such salary to the BellSouth Retirement Savings Plan, or any other tax-qualified cash or deferred arrangement sponsored by Company, and (ii) the amount of any other deferrals of such salary under any nonqualified deferred compensation plan(s) maintained by Company.

    Executive's employment shall be deemed to have been terminated under circumstances described in this Section 3 only if all of the following conditions are satisfied:

(A)

Executive's employment is terminated either (1) by Company, other than for Cause, or (2) by Executive for Good Reason; and



(B)

Executive executes a release satisfying the terms of Section 4(b) of this Agreement; and



(C)

Executive executes an agreement regarding competition with Company and Affiliated Companies satisfying the terms of Section 7(b) of this Agreement; and



(D)

Executive is not transferred to or reemployed by an Affiliated Company.

    4. Discharge and Waiver. (a) Executive fully releases and forever discharges Company and Affiliated Companies, and any employee, officer, director, representative, agent, successor or assign of Company and Affiliated Companies (both in their personal and official capacities), and all persons acting by, through and under or in concert with any of them, from any and all claims, demands, causes of action, remedies, obligations, costs and expenses of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, through the date of this Agreement, including those arising from or in connection with the terms and conditions of employment with Company (and Affiliated Companies). This paragraph is not intended to and shall not affect benefits to which Executive may be entitled under any pension, savings, health, welfare, or other benefit plan in which Executive is a participant.

    (b) Furthermore, Company's obligations under this Agreement upon termination of Executive's employment, and Executive's entitlement to any such benefits, are expressly conditioned upon execution by Executive, upon termination of his employment, of a release agreement substantially in the form of the release agreement attached to this Agreement as Exhibit "B," which is incorporated herein by this reference.

    5. Covenant Not to Sue. Executive covenants and agrees not to make or file any claim, demand or cause of action or seek any remedy of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, arising from or in connection with the matters discharged and waived in Section 4, above.

    6. Confidential Information. Executive agrees to protect Confidential Information. Executive will not use, except in connection with work for Company or Affiliated Companies, threaten to use, disclose or threaten to disclose, give or threaten to give to others any Confidential Information. For purposes of this Agreement, "Confidential Information" shall mean information, whether generated internally or externally, relating to Company's business or to Affiliated Companies' businesses which derives economic value, actual or potential, from not being generally known to other Persons and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality, including, but not limited to, studies and analyses, technical or nontechnical data, programs, patterns, compilations, devices, methods, models (including cost and/or pricing models and operating models), techniques, drawings, processes, employee compensation data, and financial data (including marketing information and strategies and personnel data). For purposes of this Agreement, Confidential Information does not include information which is not a trade secret three (3) years after termination of Executive's employment

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with Company, but shall continue to include trade secrets as long as information remains a trade secret under applicable law.

    7. Employment with Competitors. (a) While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive agrees not to provide services (as more fully described below) in competition with Company or any Affiliated Company to any person or entity which provides products or services identical to or similar to products and services provided by Company or Affiliated Companies in the same market(s), whether as an employee, consultant, independent contractor or otherwise, within the Territory.

    For purposes of this Agreement, the term "Territory" shall mean the territory in which Executive provides services to Company and Affiliated Companies, consisting of those portions of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee, and those additional markets listed on Exhibit "C" attached hereto and incorporated herein by this reference, in which Company or Affiliated Companies are engaged in business. Executive agrees that because of the widespread nature of Company's business, breach of this Agreement by engaging in competitive activity anywhere in this broad Territory would irreparably injure Company or Affiliated Companies and that, therefore, a more limited geographic restriction is neither feasible nor appropriate.

    The services which Executive has provided to Company and Affiliated Companies, and which Executive shall be prohibited from providing in competition with Company or Affiliated Companies in accordance with the terms of this Agreement shall be financial management, planning, administration, strategic planning or other participation in or providing advice with respect to the communications services business, including without limitation all forms of wireline (including without limitation local exchange, exchange access and intraLATA toll) telecommunications services, systems and products, all forms of wireless (including without limitation cellular, personal communications service, and mobile data) communications services, systems and products, all forms of electronic commerce or communications including internet and other web based applications, data transmission and networking, entertainment services, systems and products, paging services, systems and products, and advertising and publishing, to the extent engaged in by Company and Affiliated Companies on the date of this Agreement.

    Executive represents to Company that Executive's education, training and experience are such that this covenant not to compete will not jeopardize or significantly interfere with Executive's ability to secure other gainful employment.

    (b) After Executive's termination of employment, Company's obligation to provide any of the benefits, entitlements or payments described in this Agreement or in the Restricted Shares Award Agreement are expressly conditioned upon execution by Executive of an agreement, in form and substance reasonably acceptable to Company, and reflecting terms substantially identical to the terms of Section 7(a) of this Agreement updated, however, to reflect, as of the date of Executive's termination of employment, (i) the products and services provided by Company and Affiliated Companies, (ii) the territory in which such products and services are provided by Company and Affiliated Companies, and (iii) the nature of the services provided, and activities engaged in, by Executive, on behalf of Company and Affiliated Companies. Upon execution of such agreement, the provisions of Section 7(a) of this Agreement shall thereafter be void.

    (c) In the event that Executive either (i) fails or refuses to execute an agreement satisfying the terms of Section 7(b) of this Agreement following his termination of employment, or (ii) fails to comply with the terms of Section 7(a), the agreement described in Section 7(b), or Section 8 of this Agreement, then, in addition to all other rights and remedies available to Company and Affiliated Companies under this Agreement or at law or in equity:

(A)

all amounts otherwise payable by Company or an Affiliated Company to (or on behalf of) Executive pursuant to the terms of this Agreement for periods subsequent to the date of termination of employment, with regard to clause (i) above, or of such failure, with regard to clause (ii) above, as the case may be, shall be forfeited and Company and Affiliated Companies shall cease to be under any further obligation to Executive with respect to the compensation and benefits described in this Agreement;



(B)

Executive shall refund to Company promptly any and all amounts previously paid to or on behalf of Executive pursuant to the terms of this Agreement for periods subsequent to the occurrence of any event described in clause (ii) above of this Section 7(c); and

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(C)

Executive shall promptly return to Company all shares of Company's common stock delivered to Executive pursuant to the Restricted Shares Award plus, if any of such shares shall have been previously disposed of, a cash amount equal to the proceeds from such disposition (or the fair market value of such shares on the date of such disposition, if disposed of for less than fair market value).

    8. Hiring or Solicitation of Company Employees. While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive will not hire or induce or attempt to induce or solicit to leave employment with Company or Affiliated Companies, for himself or on behalf of any other Person, anyone who is or was, during Executive's employment with Company, an employee of Company or Affiliated Companies. However, Executive may offer employment on behalf of himself or on behalf of any company or entity to any such employee who terminated his or her employment without any inducement or attempted inducement or solicitation by Executive.

    9. Interpretation; Severability of Invalid Provisions. Executive acknowledges and agrees that the limitations described in this Agreement, including specifically the limitations upon his activities, are reasonable in scope, are necessary for the protection of Company's and Affiliated Companies' business, and form an essential part of the consideration for which this Agreement has been entered into. It is the intention of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under applicable laws and public policies. Nonetheless, the rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect. The provisions of this Agreement do not in any way limit or abridge Company's or Affiliated Companies' rights under the laws of unfair competition, trade secret, copyright, patent, trademark or any other applicable law(s), all of which are in addition to and cumulative of Company's or Affiliated Companies' rights under this Agreement. Executive agrees that the existence of any claim by Executive against Company or any Affiliated Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Company or any Affiliated Company of any or all of such provisions or covenants.

    10. Relief. The parties acknowledge that a breach or threatened breach by Executive of any of the terms of this Agreement would result in material and irreparable damage and injury to Company or Affiliated Companies, and that it would be difficult or impossible to establish the full monetary value of such damage. Therefore, Company and Affiliated Companies shall be entitled to injunctive relief in the event of Executive's breach or threatened breach of any of the terms contained in this Agreement. In the event of any breach of this Agreement by Executive, if Company or any Affiliated Company should employ attorneys or incur other expenses for the enforcement of any obligation or agreement of Executive contained herein, Executive agrees that, on demand and to the extent permitted by law, Executive shall reimburse Company or the Affiliated Company for its reasonable attorneys' fees and such other reasonable expenses so incurred.

    11. Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof (collectively, a "Claim") shall be settled by arbitration pursuant to the rules of the American Arbitration Association. Any such arbitration shall be conducted by one arbitrator, with experience in the matters covered by this Agreement, mutually acceptable to the parties. If the parties are unable to agree on the arbitrator within thirty (30) days of one party giving the other party written notice of intent to arbitrate a Claim, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration. The decision of the arbitrator in any such arbitration shall be conclusive and binding on the parties. Any such arbitration shall be conducted in Atlanta, Georgia.

    12. Agreement Binding. This Agreement shall be binding upon and inure to the benefit of Company and Affiliated Companies, and their successors, assignees, and designees, and Executive and Executive's heirs, executors, administrators, personal representatives and assigns.

    13. Entire Agreement; Previous Agreement. This Agreement contains the entire agreement between the parties and no statements, promises or inducements made by any party hereto, or agent of either party, which are not contained in this Agreement shall be valid or binding; provided, however, that the matters dealt with herein supersede previous written agreements between the parties on the same subject matters only to the extent such previous provisions are inconsistent with this Agreement and other provisions in written agreements between the

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parties not inconsistent with this Agreement are not affected. This Agreement may not be enlarged, modified or altered except in writing signed by the parties.

    14. Nonwaiver. The failure of Company or any Affiliated Companies to insist upon strict performance of the terms of this Agreement, or to exercise any option herein, shall not be construed as a waiver or a relinquishment for the future of such term or option, but rather the same shall continue in full force and effect.

    15. Notices. All notices, requests, demands and other communications required or permitted by this Agreement or by any statute relating to this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first-class, certified mail, postage prepaid, addressed as follows:

To Company:    Charles R. Morgan
Executive Vice President and General Counsel
BellSouth Corporation
2002 Campanile
1155 Peachtree Street, N.E.
Atlanta, GA 30309

To Executive:    Ronald M. Dykes
110 Green Fall Pointe
Atlanta, GA 30350
(or such other address as shall be provided by Executive to Company from time to time)

    16. Pooling of Interests Accounting Treatment. Notwithstanding anything to the contrary in this Agreement, if the application of any provision(s) of this Agreement, including without limitation the Restricted Shares Award described in Section 1, would preclude the use of pooling of interests accounting treatment with respect to a transaction for which such treatment otherwise is available and to be adopted by Company, this Agreement shall be modified as it applies to such transaction, to the minimum extent necessary to prevent such impact, including if necessary the invalidation of such provisions (or the entire Agreement, as the case may be). If the pooling of interests accounting rules require modification or invalidation of one or more provisions of this Agreement as it applies to such transaction, the adverse impact on the Executive shall, to the extent reasonably possible, be proportionate to the adverse impact on other similarly situated employees of Company. The Board of Directors of Company shall, in its sole and absolute discretion, make all determinations necessary under this Section; provided, that determinations regarding the application of the pooling of interests accounting rules for these purposes shall be made by Company, with the concurrence of Company's independent auditors at the time such determination is to be made.

    17. Nonduplication. Notwithstanding any other provisions of this Agreement, if Executive becomes entitled to benefits under Article III of the CIC Agreement, the severance benefits described in Article III(a) of the CIC Agreement shall be in lieu of any termination allowance to which Executive is otherwise entitled under Section 3 of this Agreement. Except as otherwise specifically provided in this Section 17, both this Agreement and the CIC Agreement shall continue in full force and effect, and Article X(e) of the CIC Agreement shall be interpreted consistently herewith.

    18. Nondisclosure. Executive shall not disclose the existence or terms of this Agreement to any third party (excluding Executive's spouse and children), except to receive advice of legal counsel, financial advisors or tax advisors (who shall also be required to maintain its confidentiality) or to comply with any statutory or common law duty; provided that these restrictions on disclosure shall not apply to the extent that the existence of this Agreement are disclosed by Company or any Affiliated Company as part of its periodic public filings and disclosures or otherwise.

    19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

    20. Governing Law. This Agreement shall be construed under and governed by the laws of the State of Georgia. Executive has been advised to consult with an attorney, acknowledges having had ample opportunity to do so and fully understands the binding effect of this Agreement. In this regard, Executive acknowledges that a

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copy of this Agreement was provided to Executive for review and consideration for up to twenty-two (22) days. Further, Executive understands that this Agreement may be revoked by Executive within seven (7) days from the date of execution of this Agreement.

    21. Definitions. For purposes of this Agreement, the following terms shall have the meaning specified below:

    (a) "Affiliated Companies"—shall mean Company and each entity in respect of which Company owns directly or indirectly (i) with respect to a corporation, stock that represents at least ten (10%) percent of the total combined voting power of all classes of stock in the corporation in connection with the election of directors of such corporation, or (ii) in the case of a joint venture, partnership, limited liability company or similar entity, and interest of at least ten (10%) percent in the capital or profits of such entity.

(b)

"Base Salary"—shall have the meaning ascribed to such term in Section 3 of this Agreement.

    (c) "Cause"—shall mean Executive's (i) engaging in an act (or acts) of willful dishonesty involving Company or Affiliated Companies or their business(es) that is demonstrably injurious to Company or Affiliated Companies; (ii) refusal or failure to follow reasonable instructions of Company's Chief Executive Officer or Board of Directors; or (iii) conviction of a crime classified as a felony.

    (d) "CIC Agreement"—the Executive Severance Agreement entered into by and between Executive and Company on October 17, 1996, providing certain benefits in the event of a change in corporate control of Company, as amended from time to time.

    (e) "Confidential Information"—shall have the meaning ascribed to such term in Section 6 of this Agreement.

    (f) "Good Reason"—shall mean, without Executive's express written consent a reduction in Executive's Base Salary, or his compensation band, as in effect immediately prior to such reduction, or the failure to pay a bonus award to which Executive is otherwise entitled under any of the short term or long term incentive plans in which Executive participates (or any successor incentive compensation plans) at the time such awards are usually paid.

    (g) "Person"—shall mean any individual, corporation, bank, partnership, joint venture, association, joint stock company, trust, unincorporated organization, governmental or other legal or business entity.

    (h) "Restricted Shares Award"—shall have the meaning ascribed to such term in Section 1 of this Agreement.

    (i) "Restricted Shares Award Agreement"—shall have the meaning ascribed to such term in Section 1 of this Agreement.

    (j) "SERP"—the BellSouth Corporation Supplemental Executive Retirement Plan, as amended from time to time.

    (k) "Stock Plan"—the BellSouth Corporation Stock Plan and related award agreements, as amended from time to time.

    (l) "Territory"—shall have the meaning ascribed to such term in Section 7 of this Agreement.

IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly authorized representative, and Executive has executed this Agreement, as of the date written above.

EXECUTIVE:	BELLSOUTH CORPORATION:
/s/ RONALD M. DYKES RONALD M. DYKES	By: /s/ RICHARD D. SIBBERNSEN
	Title: Vice President—Human Resources

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AGREEMENT

EX-10.HH-1

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Exhibit 10hh-1

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD AGREEMENT

    BellSouth Corporation ("BellSouth") and Ronald M. Dykes ("Executive"), in consideration of the mutual covenants set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, hereby agree to the terms of this Restricted Shares Award Agreement ("Agreement") effective as of October 26, 2000:

    1. Award Grant. BellSouth, acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to Executive, and Executive hereby accepts, one hundred thousand (100,000) Restricted Shares of BellSouth Corporation $1.00 par value common stock (the "Shares"), effective as of the date above. This Award is subject to the terms and conditions of this Agreement, to the further terms and conditions applicable to Restricted Shares as set forth in the Plan and to applicable terms and conditions regarding change in control in the Executive Severance Agreement dated October 17, 1996, between BellSouth and Executive (the "CIC Agreement").

    3. Restriction Period.

    (a) Vesting Schedule. Executive's interest in the Shares shall vest in accordance with the following schedule:

Vesting Date	Number of Shares
October 1, 2003	thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2004	an additional thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2005	the remaining thirty-three thousand three hundred thirty-four (33,334) shares

    (b) Death or Disability. Executive's interest in the Shares also will vest upon any earlier termination of employment by Executive with the Company or any Subsidiary, or any employer described in paragraph 9 (also referred to herein as a "Subsidiary"), by reason of (i) death or (ii) disability, provided as a result of such disability Executive is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Executive's employer which BellSouth determines to be comparable to such disability benefits.

    (c) Change in Control. Executive's interest in the Shares also will vest at any earlier time upon which Executive's general executive benefits vest under paragraph (d) of Article III of the CIC Agreement in the same manner as if Executive's interest in the Shares was specifically listed in such paragraph (d).

    (d) Forfeiture. In the event Executive terminates employment with BellSouth and its Subsidiaries before his interest in the Shares is fully vested under this Paragraph (2) above, Executive shall forfeit all of his interest in the Shares to the extent not then vested.

    3. Share Certificates. The certificates for the Shares (the "Certificates") shall be registered in the name of Executive. Executive, immediately upon receipt of the Certificates, shall execute with BellSouth an escrow agreement provided by BellSouth for this purpose substantially in the form attached hereto (the "Escrow Agreement") and deposit the Certificates with the escrow agent under such agreement (the "Escrow Agent") together with stock powers appropriately endorsed in blank. After Executive becomes vested in Shares as provided in Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of vested Shares to Executive (or to his Beneficiary or his legal representative, if appropriate). In the event of Executive's forfeiture of Shares under Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of forfeited Shares to BellSouth.

    4. Stockholder Status. Executive shall have all of the rights of a stockholder with respect to the Shares prior to any forfeiture, including the right to vote the Shares and to receive all regular cash dividends paid with respect to the Shares, subject to terms of this Agreement, the Escrow Agreement and the Plan. Notwithstanding the above, Executive shall have no right to sell, assign, transfer, exchange or encumber or make subject to any creditor's process, whether voluntary or involuntary or by operation of law, any of his interest in Shares to the extent not then

vested under Paragraph 2 above, and any attempt to do so shall be of no effect. In addition, all shares of capital stock or other securities issued with respect to or in substitution of any Shares not then vested under Paragraph 2 above, whether by BellSouth or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of BellSouth, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to the terms and conditions of this Agreement.

    5. Employment and Termination. Neither the Plan, this Agreement nor the Escrow Agreement shall give Executive the right to continued employment by BellSouth or by any Subsidiary or shall adversely affect the right of any such company to terminate Executive's employment with or without cause at any time.

    6. Securities Law Restrictions. Executive certifies that he is acquiring the Shares for his own account and that he has no present intention to sell or otherwise dispose of any of the Shares. Executive acknowledges that the Shares shall be subject to such restrictions and conditions on any resale and on any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light of any stock exchange requirements and that the Certificates shall bear legends as determined to be appropriate by BellSouth.

    7. Tax Withholding. BellSouth or any Subsidiary shall have the right to withhold from any payment to Executive, require payment from the Executive, or take such other action which such company deems necessary to satisfy any income or other tax withholding or reporting requirements arising from this Award of Restricted Shares, and Executive shall provide to any such company such information, and pay to it upon request such amounts, as it determines are required to comply with such requirements.

    8. Jurisdiction and Venue. Executive consents to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit, action, or other proceeding relating to this Agreement or the Escrow Agreement, including the enforcement of any rights under this Agreement or the Escrow Agreement and any process or notice of motion in connection with such situation or other proceeding may be serviced by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

    9. Certain Employment Transfers. In the event Executive is transferred to any company or business in which BellSouth directly or indirectly owns an interest but which is not a "subsidiary" as defined in the Plan, then Executive shall not be deemed to have terminated his employment under this Agreement until such time, if any, as Executive terminates employment with such organization and, if applicable, fails to return to BellSouth or a Subsidiary in accordance with the terms of Executive's assignment, or Executive otherwise fails to meet the terms of Executive's assignment, at which time Executive's deemed termination of employment shall be treated in the same manner as a termination of employment from BellSouth or a Subsidiary under this Agreement.

    10. Miscellaneous

    (a) Executive's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.

    (b) This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and, unless defined in this Agreement, any capitalized terms in this Agreement shall have the same meaning assigned to those terms under the Plan.

    (c) The Plan and this Agreement shall be governed by the laws of the State of Georgia.

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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BELLSOUTH CORPORATION:
By:	/s/ RICHARD D. SIBBERNSEN
EXECUTIVE:
/s/ RONALD M. DYKES RONALD M. DYKES

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD AGREEMENT

EX-10.HH-2

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Exhibit 10hh-2

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD
ESCROW AGREEMENT

    This Escrow Agreement, effective October 26, 2000, by and among BellSouth Corporation (the "Corporation"), Ronald M. Dykes (the "Executive") and The Chase Manhattan Bank, as escrow agent (the "Escrow Agent").

WITNESSETH THAT:

    WHEREAS, the Corporation has, pursuant to the BellSouth Corporation Stock Plan (the "Plan"), made an award of restricted shares of common stock of the Corporation to the Executive in recognition of the Executive's anticipated service to be rendered to the Corporation; and

    WHEREAS, such shares are subject to certain restrictions under the Plan and the terms of the Restricted Shares Award Agreement between the Corporation and the Executive dated the date hereof (the "Award Agreement"); and

    WHEREAS, in order to record the delivery of the certificates for such shares and to enforce such restrictions, the certificates are being deposited together with stock powers appropriately endorsed in blank with the Escrow Agent hereunder; and

    WHEREAS, the Corporation and the Executive desire to execute this Escrow Agreement with the Escrow Agent in order to record the terms and conditions under which such certificates have been delivered to the Escrow Agent and under which the certificates will be delivered by the Escrow Agent to Executive or the Corporation;

    NOW THEREFORE, the Corporation, the Executive and the Escrow Agent agree as follow:

    1. Receipt by the Executive. The Executive acknowledges receipt from the Corporation of certificates for shares (the "Shares") of its common stock as follows:

Certificate Number	Number of Shares
BLS	33,333
BLS	33,333
BLS	33,334

    2. Investment Representation and Certificate Legend. The Executive, by the Executive's execution of this Agreement, certifies to the Corporation that (a) the Shares received by the Executive have been received for the Executive's own account, and the Executive has no present intention to sell or otherwise dispose of any of the Shares and (b) the Executive is aware that the transfer of the Shares is restricted as indicated on the legend on the certificates for the Shares.

    3. Delivery to and Receipt by the Escrow Agent. The Executive hereby delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt from the Executive, of such certificates for the Shares, registered in the name of the Executive, in each case accompanied by stock powers executed in blank by the Executive covering all of the Shares.

    4. Delivery by the Escrow Agent. Subject to the other terms of the Plan, the Award Agreement and this Escrow Agreement, the Executive shall become entitled to redelivery of the Shares in accordance with the following schedule:

On or After This Date	The Executive shall be Entitled to the Following Number of Shares
October 1, 2003	33,333
October 1, 2004	33,333
October 1, 2005	33,334

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    The Executive acknowledges and agrees that if the Executive forfeits any shares under the Award Agreement, then all such forfeited Shares shall be returned to the Corporation and all rights of the Executive with respect to those Shares shall cease.

    The Escrow Agent shall deliver the certificates for the Shares to the Executive or to the Corporation in accordance with the written instructions of the Committee (as defined in the Plan) or an officer of the Corporation responsible for human resources matters (but in no event the Executive). Such instructions shall be issued in accordance with the provisions of the Plan, the Award Agreement and this Agreement. The Escrow Agent shall not be responsible for the propriety of any such instruction and will be fully protected in making or omitting to make any delivery in accordance with such instructions.

    5. Distributions; Release; Voting. The Executive shall be entitled to receive all regular cash dividends paid upon and voting rights with respect to all of the Shares held hereunder from time to time. All shares of capital stock or other securities issued with respect to or in substitution of any of the Shares not yet vested and held hereunder from time to time, whether by the Corporation or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of the Corporation, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to all of the terms and conditions of this Escrow Agreement and shall be redelivered to the Executive or delivered to the Corporation under the same circumstances as the portion of the Shares with respect to, or in substitution for, which they were issued. Any such cash received shall be invested in the Escrow Agent's Money Management Account.

    6. Reliance by the Escrow Agent. The Escrow Agent will be under no duties whatsoever, except such duties as are specifically set forth as such in this Escrow Agreement, and no implied covenant or obligation contrary to the terms of this Agreement will be read into this Escrow Agreement against the Escrow Agent. The Escrow Agent will be under no liability or obligation to anyone with respect to any failure on the part of the Corporation, the Committee or the Executive to perform any of their respective obligations under the Plan, the Award Agreement, or under the terms of this Agreement, or for any error or omission whatsoever on the part of the Committee, the Corporation or the Executive. The Escrow Agent shall have no liability for acting in reliance upon any instructions delivered to it and believed in good faith by it to be from the Committee or the Corporation with respect to matters for which they are responsible under the Plan and this Agreement. The Escrow Agent will be under no obligation to interpret Plan provisions, but may rely entirely upon the interpretation of the Plan by the Committee or an officer of the Corporation responsible for human resources (but in no event the Executive).

    7. Resignation. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving notice in writing of such resignation to the Corporation 180 days in advance of the date when such resignation shall take effect. The Corporation shall have the right to appoint a new escrow agent hereunder.

    8. Compensation. The Corporation hereby agrees to pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in connection with carrying out its duties hereunder.

    9. Indemnification. The Corporation hereby agrees to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Escrow Agent, arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including the costs and expenses of defending itself against any claim of liability.

    10. Notices. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if sent by registered mail, return receipt requested, as follows:

The Chase Manhattan Bank
Corporate Trust Department
450 West 33^rd Street, 15^th Floor
New York, New York 10001

BellSouth Corporation
1155 Peachtree Street, N.E., Suite 1800
Atlanta, Georgia 30309-3610

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    To the Executive at the address shown below or at such other address as any of the above may have furnished to the other parties in writing by registered mail, return receipt requested.

    11. Binding Effect. This Escrow Agreement shall be binding upon and inure to the benefit of the Corporation, the Executive and the Escrow Agent and their respective heirs, representatives, successors and assigns.

Ronald M. Dykes
	Signature:	/s/ RONALD M. DYKES
	Mailing Address:	110 Green Fall Pointe Atlanta, GA 30350
	Social Security No.:	###-##-####
BellSouth Corporation
	By:	/s/ RICHARD D. SIBBERNSEN
	Attest:	/s/ MARCY A. BASS
The Chase Manhattan Bank
	By:	/s/ BARRY A. SHAPIRO
	Attest:	/s/ OLIVA MELENDEZ

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD ESCROW AGREEMENT
WITNESSETH THAT:

EX-10.II

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Exhibit 10ii

AGREEMENT

    THIS AGREEMENT is made and entered into this 18th day of October, 2000, by and between BellSouth Corporation, a Georgia corporation ("Company"), and Gary D. Forsee ("Executive"):

    Reasons for this Agreement.  Company has identified Executive as an individual with significant skills and experience critical to the business of Company. In view of the significant and growing demand for executive talent, the potential impact on Company's executives of the transformational changes occurring within our industry and company, and the need to ensure continuity of Company's senior executive team, Company desires to provide Executive through this Agreement with certain incentives to remain in Company's employment. This Agreement is also designed to provide additional motivation for meeting Company's goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive's activities designed to protect Company's interests should Executive's employment terminate.

    Executive has been employed by Company since September 1999. Effective October 1, 2000, Executive was appointed Vice Chairman of the Company and President of BellSouth International, Inc. Prior to this appointment, Executive served as Company's Executive Vice President and Chief Staff Officer, and was responsible for managing staff functions throughout Company including corporate strategy and planning, business development, procurement, human resources, shared services and corporate support services.

    Executive acknowledges that Company and Affiliated Companies have disclosed or made available Confidential Information to Executive which could be used by Executive to Company's or Affiliated Companies' detriment. In addition, in connection with his employment, Executive has developed important relationships and contacts with employees valuable to Company and Affiliated Companies.

    Executive further acknowledges that the covenant not to compete and other restrictive covenants in this Agreement are fair and reasonable, that enforcement of the provisions of this Agreement will not cause him undue hardship, and that the provisions of this Agreement are reasonably necessary and commensurate with the need to protect Company and Affiliated Companies and their business interests and property from irreparable harm.

    Executive and Company have entered into an agreement in connection with Executive's becoming employed by Company, dated           (the "Prior Agreement"). Executive and Company now desire to replace, in part, the Prior Agreement with this Agreement.

    Agreement.  In consideration of the mutual promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Executive and Company agree as follows:

    1.Prior Agreement.  Executive and Company agree and acknowledge that, upon execution of this Agreement, this Agreement supercedes the Prior Agreement in all respects, except for the terms of section 2 (regarding certain Special Bonus Payments), section 3 (regarding certain Equity Awards), and section 19 (regarding a Duty to Defend) of the Prior Agreement.

    2.Restricted Shares Award.  In connection with execution of this Agreement, Company shall grant to Executive an award of one hundred thousand (100,000) restricted shares of Company's common stock (such award being referred to in this Agreement as the "Restricted Shares Award"). The Restricted Shares Award shall be granted pursuant to an agreement (the "Restricted Shares Award Agreement") substantially identical to the BellSouth Corporation Restricted Shares Award Agreement attached hereto as Exhibit "A" and incorporated by this reference herein.

    3.Minimum SERP Benefit; Post-Retirement Medical Benefits.  In the event Executive attains the age of fifty-eight (58) while still employed by Company:

    (a) in determining the amount of benefits payable with respect to Executive under SERP, Executive shall be entitled to benefits equal to the greater of:

(i)

an aggregate annual benefit based on forty-five percent (45%) of "Included Earnings" (as such term is defined in SERP), increased by two (2) percentage points for each additional year of "Net Credited Service" (as such term is defined in SERP) earned by Executive after the year in which his fifty-eighth (58^th) birthday occurs (such percentage not to exceed, however, in the aggregate seventy percent (70%) of Included Earnings), instead of the formula described in section 4.4(a)(i)(A) of SERP; and

(ii)

the benefit provided to Executive under SERP without regard to this Section 3(a).

 Except as otherwise provided in this Section 3(a), all other terms and conditions of SERP shall govern Executive's entitlement to benefits thereunder. In the event SERP shall be amended or restated or redesigned, benefits payable with respect to Executive under such amended, restated or redesigned plan shall include a benefit enhancement designed to approximate as nearly as reasonably possible the SERP benefit enhancement described in this Section 3(a).

and

    (b) if Executive's employment is subsequently terminated at a time when Executive has not yet satisfied age and service requirements for eligibility for Company-provided post-retirement medical benefits, Executive shall be entitled to post-retirement medical benefits from Company comparable to the coverage provided by Company's medical benefits plan(s) to similarly situated employees who do retire eligible for such post-retirement coverage. Such benefits shall be administered under procedures implemented by Company from time to time with respect to such special post-retirement benefits.

    4.Termination Allowance. In the event Executive's employment is terminated under circumstances described below in this Section 4, Company shall pay to Executive a termination allowance. The termination allowance shall be an amount equal to the sum of (i) two hundred percent (200%) of Executive's Base Salary in effect on the date of Executive's termination of employment, plus (ii) two hundred percent (200%) of the standard award amount applicable to Executive under the BellSouth Short Term Incentive Award Plan ("STIAP") for the year in which his date of termination occurs, less all applicable withholdings, payable in a single lump sum payment. Payment of the termination allowance shall be made as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment.

    For purposes of this Agreement, "Base Salary" shall refer to the gross annual base salary payable to Executive including (i) the amounts of any before-tax contributions made by Executive from such salary to the BellSouth Retirement Savings Plan, or any other tax-qualified cash or deferred arrangement sponsored by Company, and (ii) the amount of any other deferrals of such salary under any nonqualified deferred compensation plan(s) maintained by Company.

    Executive's employment shall be deemed to have been terminated under circumstances described in this Section 4 only if all of the following conditions are satisfied:

(A)

Executive's employment is terminated either (1) by Company, other than for Cause, or (2) by Executive for Good Reason; and



(B)

Executive executes a release satisfying the terms of Section 7(b) of this Agreement; and



(C)

Executive executes an agreement regarding competition with Company and Affiliated Companies satisfying the terms of Section 10(b) of this Agreement; and



(D)

Executive is not transferred to or reemployed by an Affiliated Company.

    5.Vesting of Executive Benefits.  In the event Executive's employment is terminated under circumstances described in Section 4 of this Agreement, all benefits of Executive under the BellSouth Supplemental Life Insurance Plan and the SERP, shall be determined as if Executive, upon his termination of employment, had been eligible for a service pension under the terms and conditions of the BellSouth Personal Retirement Account Pension Plan. This provision shall be disregarded in determining benefits of (or with respect to) Executive under any other Company-sponsored compensation or benefit plan or program, including without limitation the Stock Plan.

    6.Non-Vested Stock Options.  In the event Executive's employment is terminated under circumstances described in Section 4 of this Agreement, Company shall pay to Executive an amount with respect to all Options (as such term is defined in the Stock Plan) to acquire Company stock which are forfeited by virtue of having not been vested and exercisable at the time of such termination of employment, determined:

(i)

by multiplying the number of Options in each such grant by the amount, if any, by which the Fair Market Value of Company's common stock subject to the Option exceeds the exercise price of those Options; and

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(ii)

by then multiplying the amount determined in (i) above with respect to each such Option grant by a fraction, the numerator of which is the number of whole calendar months which shall have elapsed from the grant date of such Option through the date of Executive's employment termination date, and the denominator of which is the number of calendar months in the full vesting period applicable to such grant.

    Payment of the amount so determined, less all applicable withholdings, shall be made in a single lump sum payment as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment.

    For purposes of this Agreement, "Fair Market Value" shall mean the average of the high and low sales prices of one share of Company stock subject to the Option on the New York Stock Exchange for the last business day (on which the New York Stock Exchange operates and is open to the public for trading) of each of the three (3) months preceding the month in which Executive's termination of employment occurs.

    7.Discharge and Waiver.  (a) Executive fully releases and forever discharges Company and Affiliated Companies, and any employee, officer, director, representative, agent, successor or assign of Company and Affiliated Companies (both in their personal and official capacities), and all persons acting by, through and under or in concert with any of them, from any and all claims, demands, causes of action, remedies, obligations, costs and expenses of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, through the date of this Agreement, including those arising from or in connection with the terms and conditions of employment with Company (and Affiliated Companies). This paragraph is not intended to and shall not affect benefits to which Executive may be entitled under any pension, savings, health, welfare, or other benefit plan in which Executive is a participant.

    (b)  Furthermore, Company's obligations under this Agreement upon termination of Executive's employment, and Executive's entitlement to any such benefits, are expressly conditioned upon execution by Executive, upon termination of his employment, of a release agreement substantially in the form of the release agreement attached to this Agreement as Exhibit "B," which is incorporated herein by this reference.

    8.Covenant Not to Sue.  Executive covenants and agrees not to make or file any claim, demand or cause of action or seek any remedy of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, arising from or in connection with the matters discharged and waived in Section 7, above.

    9.Confidential Information.  Executive agrees to protect Confidential Information. Executive will not use, except in connection with work for Company or Affiliated Companies, threaten to use, disclose or threaten to disclose, give or threaten to give to others any Confidential Information. For purposes of this Agreement, "Confidential Information" shall mean information, whether generated internally or externally, relating to Company's business or to Affiliated Companies' businesses which derives economic value, actual or potential, from not being generally known to other Persons and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality, including, but not limited to, studies and analyses, technical or nontechnical data, programs, patterns, compilations, devices, methods, models (including cost and /or pricing models and operating models), techniques, drawings, processes, employee compensation data, and financial data (including marketing information and strategies and personnel data). For purposes of this Agreement, Confidential Information does not include information which is not a trade secret three (3) years after termination of Executive's employment with Company, but shall continue to include trade secrets as long as information remains a trade secret under applicable law.

    10.Employment with Competitors.  (a) While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive agrees not to provide services (as more fully described below) in competition with Company or any Affiliated Company to any person or entity which provides products or services identical to or similar to products and services provided by Company or Affiliated Companies in the same market(s), whether as an employee, consultant, independent contractor or otherwise, within the Territory.

    For purposes of this Agreement, the term "Territory" shall mean the territory in which Executive provides services to Company and Affiliated Companies, consisting of those portions of Alabama, Florida, Georgia,

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Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee, and those additional markets listed on Exhibit "C" attached hereto and incorporated herein by this reference, in which Company or Affiliated Companies are engaged in business. Executive agrees that because of the widespread nature of Company's business, breach of this Agreement by engaging in competitive activity anywhere in this broad Territory would irreparably injure Company or Affiliated Companies and that, therefore, a more limited geographic restriction is neither feasible nor appropriate.

    The services which Executive has provided to Company and Affiliated Companies, and which Executive shall be prohibited from providing in competition with Company or Affiliated Companies in accordance with the terms of this Agreement shall be management, strategic planning, business planning, administration, or other participation in or providing advice with respect to the communications services business, including without limitation all forms of wireline (including without limitation local exchange, exchange access and intraLATA toll) telecommunications services, systems and products, all forms of wireless (including without limitation cellular, personal communications service, and mobile data) communications services, systems and products, all forms of electronic commerce or communications including internet and other web based applications, data transmission and networking, entertainment services, systems and products, paging services, systems and products, and advertising and publishing, to the extent engaged in by Company and Affiliated Companies on the date of this Agreement.

    Executive represents to Company that Executive's education, training and experience are such that this covenant not to compete will not jeopardize or significantly interfere with Executive's ability to secure other gainful employment.

    (b) Company's obligation to provide any of the benefits, entitlements or payments described in this Agreement or in the Restricted Shares Award Agreement are expressly conditioned upon execution by Executive of an agreement, in form and substance reasonably acceptable to Company, and reflecting terms substantially identical to the terms of Section 10(a) of this Agreement updated, however, to reflect, as of the date of Executive's termination of employment, (i) the products and services provided by Company and Affiliated Companies, (ii) the territory in which such products and services are provided by Company and Affiliated Companies, and (iii) the nature of the services provided, and activities engaged in, by Executive. Upon execution of such agreement, the provisions of Section 10(a) of this Agreement shall thereafter be void.

    (c) In the event that Executive either (i) fails or refuses to execute an agreement satisfying the terms of Section 10(b) of this Agreement following his termination of employment, or (ii) fails to comply with the terms of Section 10(a), the agreement described in Section 10(b), or Section 11 of this Agreement, then, in addition to all other rights and remedies available to Company and Affiliated Companies under this Agreement or at law or in equity:

(A)

all amounts otherwise payable by Company or an Affiliated Company to (or on behalf of) Executive pursuant to the terms of this Agreement for periods subsequent to the date of termination of employment, with regard to clause (i) above, or of such failure, with regard to clause (ii) above, as the case may be, shall be forfeited and Company and Affiliated Companies shall cease to be under any further obligation to Executive with respect to the compensation and benefits described in this Agreement;



(B)

Executive shall refund to Company promptly any and all amounts previously paid to or on behalf of Executive pursuant to the terms of this Agreement for periods subsequent to the occurrence of any event described in clause (ii) above of this Section 10(c); and



(C)

Executive shall promptly return to Company all shares of Company's common stock delivered to Executive pursuant to the Restricted Shares Award plus, if any of such shares shall have been previously disposed of, a cash amount equal to the proceeds from such disposition (or the fair market value of such shares on the date of such disposition, if disposed of for less than fair market value).

    11.Hiring or Solicitation of Company Employees.  While employed by Company or an Affiliated Company, and during the period of eighteen (18) months after the termination of such employment, Executive will not hire or induce or attempt to induce or solicit to leave employment with Company or Affiliated Companies, for himself or on behalf of any other Person, anyone who is or was, during Executive's employment with Company, an employee of Company or Affiliated Companies. However, Executive may offer employment on behalf of himself or on behalf of

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any company or entity to any such employee who terminated his or her employment without any inducement or attempted inducement or solicitation by Executive.

    12.Interpretation; Severability of Invalid Provisions.  Executive acknowledges and agrees that the limitations described in this Agreement, including specifically the limitations upon his activities, are reasonable in scope, are necessary for the protection of Company's and Affiliated Companies' business, and form an essential part of the consideration for which this Agreement has been entered into. It is the intention of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under applicable laws and public policies. Nonetheless, the rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect. The provisions of this Agreement do not in any way limit or abridge Company's or Affiliated Companies' rights under the laws of unfair competition, trade secret, copyright, patent, trademark or any other applicable law(s), all of which are in addition to and cumulative of Company's or Affiliated Companies' rights under this Agreement. Executive agrees that the existence of any claim by Executive against Company or any Affiliated Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Company or any Affiliated Company of any or all of such provisions or covenants.

    13.Relief.  The parties acknowledge that a breach or threatened breach by Executive of any of the terms of this Agreement would result in material and irreparable damage and injury to Company or Affiliated Companies, and that it would be difficult or impossible to establish the full monetary value of such damage. Therefore, Company and Affiliated Companies shall be entitled to injunctive relief in the event of Executive's breach or threatened breach of any of the terms contained in this Agreement. In the event of any breach of this Agreement by Executive, if Company or any Affiliated Company should employ attorneys or incur other expenses for the enforcement of any obligation or agreement of Executive contained herein, Executive agrees that, on demand and to the extent permitted by law, Executive shall reimburse Company or the Affiliated Company for its reasonable attorneys' fees and such other reasonable expenses so incurred.

    14.Arbitration.  Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof (collectively, a "Claim") shall be settled by arbitration pursuant to the rules of the American Arbitration Association. Any such arbitration shall be conducted by one arbitrator, with experience in the matters covered by this Agreement, mutually acceptable to the parties. If the parties are unable to agree on the arbitrator within thirty (30) days of one party giving the other party written notice of intent to arbitrate a Claim, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration. The decision of the arbitrator in any such arbitration shall be conclusive and binding on the parties. Any such arbitration shall be conducted in Atlanta, Georgia.

    15.Agreement Binding.  This Agreement shall be binding upon and inure to the benefit of Company and Affiliated Companies, and their successors, assignees, and designees, and Executive and Executive's heirs, executors, administrators, personal representatives and assigns.

    16.Entire Agreement; Previous Agreement.  This Agreement contains the entire agreement between the parties and no statements, promises or inducements made by any party hereto, or agent of either party, which are not contained in this Agreement shall be valid or binding; provided, however, that the matters dealt with herein supersede previous written agreements between the parties on the same subject matters only to the extent such previous provisions are inconsistent with this Agreement and other provisions in written agreements between the parties not inconsistent with this Agreement are not affected. This Agreement may not be enlarged, modified or altered except in writing signed by the parties.

    17.Nonwaiver.  The failure of Company or any Affiliated Companies to insist upon strict performance of the terms of this Agreement, or to exercise any option herein, shall not be construed as a waiver or a relinquishment for the future of such term or option, but rather the same shall continue in full force and effect.

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    18.Notices.  All notices, requests, demands and other communications required or permitted by this Agreement or by any statute relating to this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first-class, certified mail, postage prepaid, addressed as follows:

To Company:	Charles R. Morgan Executive Vice President and General Counsel BellSouth Corporation 2002 Campanile 1155 Peachtree Street, N.E. Atlanta, GA 30309
To Executive:	Gary D. Forsee 4179 Randall Court Atlanta, GA 30327 (or such other address as shall be provided by Executive to Company from time to time)

    19.Pooling of Interests Accounting Treatment.  Notwithstanding anything to the contrary in this Agreement, if the application of any provision(s) of this Agreement, including without limitation, the grant of the Restricted Shares Award described in Section 2, would preclude the use of pooling of interests accounting treatment with respect to a transaction for which such treatment otherwise is available and to be adopted by Company, this Agreement shall be modified as it applies to such transaction, to the minimum extent necessary to prevent such impact, including if necessary the invalidation of such provisions (or the entire Agreement, as the case may be). If the pooling of interests accounting rules require modification or invalidation of one or more provisions of this Agreement as it applies to such transaction, the adverse impact on the Executive shall, to the extent reasonably possible, be proportionate to the adverse impact on other similarly situated employees of Company. The Board of Directors of Company shall, in its sole and absolute discretion, make all determinations necessary under this Section; provided, that determinations regarding the application of the pooling of interests accounting rules for these purposes shall be made by Company, with the concurrence of Company's independent auditors at the time such determination is to be made.

    20.Nonduplication.  Notwithstanding any other provisions of this Agreement, if Executive becomes entitled to benefits under Article III of the CIC Agreement, (i) the severance benefits described in Article III(a) of the CIC Agreement shall be in lieu of any termination allowance to which Executive is otherwise entitled under Section 4 of this Agreement; (ii) Article III(d) of the CIC Agreement shall apply in lieu of the provisions of Section 5 of this Agreement; and (iii) Article IV of the CIC Agreement shall apply in lieu of the provisions of Section 6 of this Agreement. Except as otherwise specifically provided in this Section 20, both this Agreement and the CIC Agreement shall continue in full force and effect, and Article X(e) of the CIC Agreement shall be interpreted consistently herewith.

    21.Nondisclosure.  Executive shall not disclose the existence or terms of this Agreement to any third party (excluding Executive's spouse and children), except to receive advice of legal counsel, financial advisors or tax advisors (who shall also be required to maintain its confidentiality) or to comply with any statutory or common law duty; provided that these restrictions on disclosure shall not apply to the extent that the existence of this Agreement are disclosed by Company or any Affiliated Company as part of its periodic public filings and disclosures or otherwise.

    22.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

    23.Governing Law.  This Agreement shall be construed under and governed by the laws of the State of Georgia. Executive has been advised to consult with an attorney, acknowledges having had ample opportunity to do so and fully understands the binding effect of this Agreement. In this regard, Executive acknowledges that a copy of this Agreement was provided to Executive for review and consideration for up to twenty-two (22) days. Further, Executive understands that this Agreement may be revoked by Executive within seven (7) days from the date of execution of this Agreement.

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    24.Definitions.  For purposes of this Agreement, the following terms shall have the meaning specified below:

    (a) "Affiliated Companies"—shall mean Company and each entity in respect of which Company owns directly or indirectly (i) with respect to a corporation, stock that represents at least ten (10%) percent of the total combined voting power of all classes of stock in the corporation in connection with the election of directors of such corporation, or (ii) in the case of a joint venture, partnership, limited liability company or similar entity, and interest of at least ten (10%) percent in the capital or profits of such entity.

    (b) "Base Salary"—shall have the meaning ascribed to such term in Section 4 of this Agreement.

    (c) "Cause"—shall mean Executive's (i) engaging in an act (or acts) of willful dishonesty involving Company or Affiliated Companies or their business(es) that is demonstrably injurious to Company or Affiliated Companies; (ii) refusal or failure to follow reasonable instructions of Company's Chief Executive Officer or Board of Directors; or (iii) conviction of a crime classified as a felony.

    (d) "CIC Agreement"—the Executive Severance Agreement entered into by and between Executive and Company on September 1, 1999, providing certain benefits in the event of a change in corporate control of Company, as amended from time to time.

    (e) "Fair Market Value"—shall have the meaning ascribed to such term in Section 6 of this Agreement.

    (f) "Good Reason"—shall mean, without Executive's express written consent, a reduction in Executive's Base Salary, or his compensation band, as in effect immediately prior to such reduction, or the failure to pay a bonus award to which Executive is otherwise entitled under any of the short term or long term incentive plans in which Executive participates (or any successor incentive compensation plans) at the time such awards are usually paid.

    (g) "Person"—shall mean any individual, corporation, bank, partnership, joint venture, association, joint stock company, trust, unincorporated organization, governmental or other legal or business entity.

    (h) "Prior Agreement"—shall have the meaning ascribed to such term in the preamble to this Agreement.

    (i) "Restricted Shares Award"—shall have the meaning ascribed to such term in Section 2 of this Agreement.

    (j) "Restricted Shares Award Agreement"—shall have the meaning ascribed to such term in Section 2 of this Agreement.

    (k) "SERP"—the BellSouth Corporation Supplemental Executive Retirement Plan, as amended from time to time.

    (l) "Stock Plan"—the BellSouth Corporation Stock Plan and related award agreements, as amended from time to time.

    (m) "Territory"—shall have the meaning ascribed to such term in Section 10 of this Agreement.

IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly authorized representative, and Executive has executed this Agreement, as of the date written above.

EXECUTIVE:	BELLSOUTH CORPORATION:
/s/ GARY D. FORSEE GARY D. FORSEE	By: /s/ RICHARD D. SIBBERNSEN
	Title: Vice President—Human Resources

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AGREEMENT

EX-10.II-1

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Exhibit 10ii-1

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD AGREEMENT

    BellSouth Corporation ("BellSouth") and Gary D. Forsee ("Executive"), in consideration of the mutual covenants set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, hereby agree to the terms of this Restricted Shares Award Agreement ("Agreement") effective as of October 18, 2000:

    1. Award Grant. BellSouth, acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to Executive, and Executive hereby accepts, one hundred thousand (100,000) Restricted Shares of BellSouth Corporation $1.00 par value common stock (the "Shares"), effective as of the date above. This Award is subject to the terms and conditions of this Agreement, to the further terms and conditions applicable to Restricted Shares as set forth in the Plan and to applicable terms and conditions regarding change in control in the Executive Severance Agreement dated September 1, 1999 between BellSouth and Executive (the "CIC Agreement").

    2. Restriction Period.

    (a) Vesting Schedule. Executive's interest in the Shares shall vest in accordance with the following schedule:

Vesting Date	Number of Shares
October 1, 2003	thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2004	an additional thirty-three thousand three hundred thirty-three (33,333) shares
October 1, 2005	the remaining thirty-three thousand three hundred thirty-four (33,334) shares

    (b) Death or Disability. Executive's interest in the Shares also will vest upon any earlier termination of employment by Executive with the Company or any Subsidiary, or any employer described in paragraph 9 (also referred to herein as a "Subsidiary"), by reason of (i) death or (ii) disability, provided as a result of such disability Executive is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Executive's employer which BellSouth determines to be comparable to such disability benefits.

    (c) Change in Control. Executive's interest in the Shares also will vest at any earlier time upon which Executive's general executive benefits vest under paragraph (d) of Article III of the CIC Agreement in the same manner as if Executive's interest in the Shares was specifically listed in such paragraph (d).

    (d) Forfeiture. In the event Executive terminates employment with BellSouth and its Subsidiaries before his interest in the Shares is fully vested under this Paragraph (2) above, Executive shall forfeit all of his interest in the Shares to the extent not then vested.

    3. Share Certificates. The certificates for the Shares (the "Certificates") shall be registered in the name of Executive. Executive, immediately upon receipt of the Certificates, shall execute with BellSouth an escrow agreement provided by BellSouth for this purpose substantially in the form attached hereto (the "Escrow Agreement") and deposit the Certificates with the escrow agent under such agreement (the "Escrow Agent") together with stock powers appropriately endorsed in blank. After Executive becomes vested in Shares as provided in Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of vested Shares to Executive (or to his Beneficiary or his legal representative, if appropriate). In the event of Executive's forfeiture of Shares under Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of forfeited Shares to BellSouth.

    4. Stockholder Status. Executive shall have all of the rights of a stockholder with respect to the Shares prior to any forfeiture, including the right to vote the Shares and to receive all regular cash dividends paid with respect to the Shares, subject to terms of this Agreement, the Escrow Agreement and the Plan. Notwithstanding the above, Executive shall have no right to sell, assign, transfer, exchange or encumber or make subject to any creditor's process, whether voluntary or involuntary or by operation of law, any of his interest in Shares to the extent not then vested under Paragraph 2 above, and any attempt to do so shall be of no effect. In addition, all shares of capital stock or other securities issued with respect to or in substitution of any Shares not then vested under Paragraph 2

above, whether by BellSouth or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of BellSouth, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to the terms and conditions of this Agreement.

    5. Employment and Termination. Neither the Plan, this Agreement nor the Escrow Agreement shall give Executive the right to continued employment by BellSouth or by any Subsidiary or shall adversely affect the right of any such company to terminate Executive's employment with or without cause at any time.

    6. Securities Law Restrictions. Executive certifies that he is acquiring the Shares for his own account and that he has no present intention to sell or otherwise dispose of any of the Shares. Executive acknowledges that the Shares shall be subject to such restrictions and conditions on any resale and on any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light of any stock exchange requirements and that the Certificates shall bear legends as determined to be appropriate by BellSouth.

    7. Tax Withholding. BellSouth or any Subsidiary shall have the right to withhold from any payment to Executive, require payment from the Executive, or take such other action which such company deems necessary to satisfy any income or other tax withholding or reporting requirements arising from this Award of Restricted Shares, and Executive shall provide to any such company such information, and pay to it upon request such amounts, as it determines are required to comply with such requirements.

    8. Jurisdiction and Venue. Executive consents to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit, action, or other proceeding relating to this Agreement or the Escrow Agreement, including the enforcement of any rights under this Agreement or the Escrow Agreement and any process or notice of motion in connection with such situation or other proceeding may be serviced by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

    9. Certain Employment Transfers. In the event Executive is transferred to any company or business in which BellSouth directly or indirectly owns an interest but which is not a "subsidiary" as defined in the Plan, then Executive shall not be deemed to have terminated his employment under this Agreement until such time, if any, as Executive terminates employment with such organization and, if applicable, fails to return to BellSouth or a Subsidiary in accordance with the terms of Executive's assignment, or Executive otherwise fails to meet the terms of Executive's assignment, at which time Executive's deemed termination of employment shall be treated in the same manner as a termination of employment from BellSouth or a Subsidiary under this Agreement.

    10. Miscellaneous

    (a) Executive's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.

    (b) This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and, unless defined in this Agreement, any capitalized terms in this Agreement shall have the same meaning assigned to those terms under the Plan.

    (c) The Plan and this Agreement shall be governed by the laws of the State of Georgia.

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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BELLSOUTH CORPORATION:
By:	/s/ RICHARD D. SIBBERNSEN
EXECUTIVE:
	/s/ GARY D. FORSEE GARY D. FORSEE

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD AGREEMENT

EX-10.II-2

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Exhibit 10ii-2

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD
ESCROW AGREEMENT

    This Escrow Agreement, effective October 18, 2000, by and among BellSouth Corporation (the "Corporation"), Gary D. Forsee (the "Executive") and The Chase Manhattan Bank, as escrow agent (the "Escrow Agent").

WITNESSETH THAT:

    WHEREAS, the Corporation has, pursuant to the BellSouth Corporation Stock Plan (the "Plan"), made an award of restricted shares of common stock of the Corporation to the Executive in recognition of the Executive's anticipated service to be rendered to the Corporation; and

    WHEREAS, such shares are subject to certain restrictions under the Plan and the terms of the Restricted Shares Award Agreement between the Corporation and the Executive dated the date hereof (the "Award Agreement"); and

    WHEREAS, in order to record the delivery of the certificates for such shares and to enforce such restrictions, the certificates are being deposited together with stock powers appropriately endorsed in blank with the Escrow Agent hereunder; and

    WHEREAS, the Corporation and the Executive desire to execute this Escrow Agreement with the Escrow Agent in order to record the terms and conditions under which such certificates have been delivered to the Escrow Agent and under which the certificates will be delivered by the Escrow Agent to Executive or the Corporation;

    NOW THEREFORE, the Corporation, the Executive and the Escrow Agent agree as follow:

    1. Receipt by the Executive. The Executive acknowledges receipt from the Corporation of certificates for shares (the "Shares") of its common stock as follows:

Certificate Number	Number of Shares
BLS	33,333
BLS	33,333
BLS	33,334

    2. Investment Representation and Certificate Legend. The Executive, by the Executive's execution of this Agreement, certifies to the Corporation that (a) the Shares received by the Executive have been received for the Executive's own account, and the Executive has no present intention to sell or otherwise dispose of any of the Shares and (b) the Executive is aware that the transfer of the Shares is restricted as indicated on the legend on the certificates for the Shares.

    3. Delivery to and Receipt by the Escrow Agent. The Executive hereby delivers to the Escrow Agent, and the Escrow Agent hereby acknowledges receipt from the Executive, of such certificates for the Shares, registered in the name of the Executive, in each case accompanied by stock powers executed in blank by the Executive covering all of the Shares.

    4. Delivery by the Escrow Agent. Subject to the other terms of the Plan, the Award Agreement and this Escrow Agreement, the Executive shall become entitled to redelivery of the Shares in accordance with the following schedule:

On or After This Date	The Executive shall be Entitled to the Following Number of Shares
October 1, 2003	33,333
October 1, 2004	33,333
October 1, 2005	33,334

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The Executive acknowledges and agrees that if the Executive forfeits any shares under the Award Agreement, then all such forfeited Shares shall be returned to the Corporation and all rights of the Executive with respect to those Shares shall cease.

    The Escrow Agent shall deliver the certificates for the Shares to the Executive or to the Corporation in accordance with the written instructions of the Committee (as defined in the Plan) or an officer of the Corporation responsible for human resources matters (but in no event the Executive). Such instructions shall be issued in accordance with the provisions of the Plan, the Award Agreement and this Agreement. The Escrow Agent shall not be responsible for the propriety of any such instruction and will be fully protected in making or omitting to make any delivery in accordance with such instructions.

    5. Distributions; Release; Voting. The Executive shall be entitled to receive all regular cash dividends paid upon and voting rights with respect to all of the Shares held hereunder from time to time. All shares of capital stock or other securities issued with respect to or in substitution of any of the Shares not yet vested and held hereunder from time to time, whether by the Corporation or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of the Corporation, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to all of the terms and conditions of this Escrow Agreement and shall be redelivered to the Executive or delivered to the Corporation under the same circumstances as the portion of the Shares with respect to, or in substitution for, which they were issued. Any such cash received shall be invested in the Escrow Agent's Money Management Account.

    6. Reliance by the Escrow Agent. The Escrow Agent will be under no duties whatsoever, except such duties as are specifically set forth as such in this Escrow Agreement, and no implied covenant or obligation contrary to the terms of this Agreement will be read into this Escrow Agreement against the Escrow Agent. The Escrow Agent will be under no liability or obligation to anyone with respect to any failure on the part of the Corporation, the Committee or the Executive to perform any of their respective obligations under the Plan, the Award Agreement, or under the terms of this Agreement, or for any error or omission whatsoever on the part of the Committee, the Corporation or the Executive. The Escrow Agent shall have no liability for acting in reliance upon any instructions delivered to it and believed in good faith by it to be from the Committee or the Corporation with respect to matters for which they are responsible under the Plan and this Agreement. The Escrow Agent will be under no obligation to interpret Plan provisions, but may rely entirely upon the interpretation of the Plan by the Committee or an officer of the Corporation responsible for human resources (but in no event the Executive).

    7. Resignation. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving notice in writing of such resignation to the Corporation 180 days in advance of the date when such resignation shall take effect. The Corporation shall have the right to appoint a new escrow agent hereunder.

    8. Compensation. The Corporation hereby agrees to pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in connection with carrying out its duties hereunder.

    9. Indemnification. The Corporation hereby agrees to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Escrow Agent, arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including the costs and expenses of defending itself against any claim of liability.

    10. Notices. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if sent by registered mail, return receipt requested, as follows:

The Chase Manhattan Bank
Corporate Trust Department
450 West 33^rd Street, 15^th Floor
New York, New York 10001

BellSouth Corporation
1155 Peachtree Street, N.E., Suite 1800
Atlanta, Georgia 30309-3610

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    To the Executive at the address shown below or at such other address as any of the above may have furnished to the other parties in writing by registered mail, return receipt requested.

    11. Binding Effect. This Escrow Agreement shall be binding upon and inure to the benefit of the Corporation, the Executive and the Escrow Agent and their respective heirs, representatives, successors and assigns.

Gary D. Forsee
	Signature:	/s/ GARY D. FORSEE
	Mailing Address:	4179 Randall Court Atlanta, GA 30327
	Social Security No.:	###-##-####
BellSouth Corporation
	By:	/s/ RICHARD D. SIBBERNSEN
	Attest:	/s/ MARCY A. BASS
The Chase Manhattan Bank
	By:	/s/ BARRY A. SHAPIRO
	Attest:	/s/ OLIVA MELENDEZ

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD ESCROW AGREEMENT
WITNESSETH THAT:

EX-10.II-3

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Exhibit 10ii-3

BELLSOUTH CORPORATION STOCK PLAN
RESTRICTED SHARES AWARD AGREEMENT

    BellSouth Corporation ("BellSouth") and Gary D. Forsee ("Executive"), in consideration of the mutual covenants set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, hereby agree to the terms of this Restricted Shares Award Agreement ("Agreement") effective as of September 1, 1999:

    1.  Award Grant.  BellSouth, acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to Executive, and Executive hereby accepts, eight thousand (8,000) Restricted Shares of BellSouth Corporation $1.00 par value common stock (the "Shares"), effective as of the date above. This Award is subject to the terms and conditions of this Agreement, to the further terms and conditions applicable to Restricted Shares as set forth in the Plan and to applicable terms and conditions regarding noncompetition and relief in the Agreement dated September 1, 1999 between BellSouth and Executive.

    2.  Restriction Period.  Executive's interest in the Shares shall vest in accordance with the following schedule:

Vesting Date	Number of Shares
September 1, 2000	two thousand (2,000) Shares
September 1, 2001	an additional two thousand (2,000) Shares
September 1, 2002	an additional two thousand (2,000) Shares
September 1, 2003	an additional two thousand (2,000) Shares

Executive's interest in the Shares also will vest upon any earlier termination of employment by Executive with the Company or any Subsidiary, or any employer described in paragraph 9 (also referred to herein as a "Subsidiary"), by reason of (i) death or (ii) disability, provided as a result of such disability Executive is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Executive's employer which BellSouth determines to be comparable to such disability benefits. In the event Executive terminates employment with BellSouth and its Subsidiaries before a Vesting Date for any reason other than death or disability as defined above, Executive shall forfeit all of his interest in the Shares to the extent not then vested. In addition, Executive shall forfeit all of his interest in the Shares to the extent not then vested (i) on March 1, 2000, in the event Executive on such date does not own BellSouth common shares purchased by Executive with an aggregate purchase price equal to greater than $1,650,000 and (ii) on any date after March 1, 2000 and on or before the September 1, 2003 final Vesting Date on which Executive fails to comply with the BellSouth stock purchase guidelines as then applicable to Executive.

    3.  Share Certificates.  The certificates for the Shares (the "Certificates") shall be registered in the name of Executive. Executive, immediately upon receipt of the Certificates, shall execute with BellSouth an escrow agreement provided by BellSouth for this purpose substantially in the form attached hereto (the "Escrow Agreement") and deposit the Certificates with the escrow agent under such agreement (the "Escrow Agent") together with stock powers appropriately endorsed in blank. After Executive becomes vested in Shares on a Vesting Date or upon his earlier death or disability as provided in Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of vested Shares to Executive (or to his Beneficiary or his legal representative, if appropriate). In the event of Executive's forfeiture of Shares under Paragraph 2 above, the Escrow Agent shall release the applicable Certificate representing the number of forfeited Shares to BellSouth.

    4.  Stockholder Status.  Executive shall have all of the rights of a stockholder with respect to the Shares prior to any forfeiture, including the right to vote the Shares and to receive all regular cash dividends paid with respect to the Shares, subject to terms of this Agreement, the Escrow Agreement and the Plan. Notwithstanding the above, Executive shall have no right to sell, assign, transfer, exchange or encumber or make subject to any creditor's process, whether voluntary or involuntary or by operation of law, any of his interest in Shares to the extent not then vested under Paragraph 2 above, and any attempt to do so shall be of no effect. In addition, all shares of capital stock or other securities issued with respect to or in substitution of any Shares not then vested under Paragraph 2 above, whether by BellSouth or by another issuer, any cash or other property received on account of a redemption of such Shares or with respect to such Shares upon the liquidation, sale or merger of BellSouth, and any other distributions with respect to such Shares with the exception of regular cash dividends, shall remain subject to the terms and conditions of this Agreement.

    5.  Employment and Termination.  Neither the Plan, this Agreement nor the Escrow Agreement shall give Executive the right to continued employment by BellSouth or by any Subsidiary or shall adversely affect the right of any such company to terminate Executive's employment with or without cause at any time.

    6.  Securities Law Restrictions.  Executive certifies that he is acquiring the Shares for his own account and that he has no present intention to sell or otherwise dispose of any of the Shares. Executive acknowledges that the Shares shall be subject to such restrictions and conditions on any resale and on any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light of any stock exchange requirements and that the Certificates shall bear legends as determined to be appropriate by BellSouth.

    7.  Tax Withholding.  BellSouth or any Subsidiary shall have the right to withhold from any payment to Executive, require payment from the Executive, or take such other action which such company deems necessary to satisfy any income or other tax withholding or reporting requirements arising from this Award of Restricted Shares, and Executive shall provide to any such company such information, and pay to it upon request such amounts, as it determines are required to comply with such requirements.

    8.  Jurisdiction and Venue.  Executive consents to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit, action, or other proceeding relating to this Agreement or the Escrow Agreement, including the enforcement of any rights under this Agreement or the Escrow Agreement and any process or notice of motion in connection with such situation or other proceeding may be serviced by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

    9.  Certain Employment Transfers.  In the event Executive is transferred to any company or business in which BellSouth directly or indirectly owns an interest but which is not a "subsidiary" as defined in the Plan, then Executive shall not be deemed to have terminated his employment under this Agreement until such time, if any, as Executive terminates employment with such organization and, if applicable, fails to return to BellSouth or a Subsidiary in accordance with the terms of Executive's assignment, or Executive otherwise fails to meet the terms of Executive's assignment, at which time Executive's deemed termination of employment shall be treated in the same manner as a termination of employment from BellSouth or a Subsidiary under this Agreement.

    10.  Miscellaneous

    (a) Executive's rights under this Agreement can be modified, suspended or canceled only in accordance with the terms of the Plan.

    (b) This Agreement shall be subject to the applicable provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement and, unless defined in this Agreement, any capitalized terms in this Agreement shall have the same meaning assigned to those terms under the Plan.

    (c) The Plan and this Agreement shall be governed by the laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BELLSOUTH CORPORATION:

By: /s/ RICHARD D. SIBBERNSEN

EXECUTIVE:

/s/ GARY D. FORSEE Gary D. Forsee

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BELLSOUTH CORPORATION STOCK PLAN RESTRICTED SHARES AWARD AGREEMENT

EX-10.Q-9

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Exhibit 10q-9

AMENDMENT TO THE BELLSOUTH PERSONAL
RETIREMENT ACCOUNT PENSION PLAN

    WHEREAS, BellSouth Corporation (the "Company") sponsors the BellSouth Personal Retirement Account Pension Plan (the "Plan"), which was amended and restated effective January 1, 1998, and subsequently amended from time to time; and

    WHEREAS, pursuant to section 15.01 of the Plan, the BellSouth Employees' Benefit Claim Review Committee (the "Committee") is authorized to adopt nonmaterial amendments to the Plan; and

    WHEREAS, the Committee approved all of the following revisions to the Plan document at its February 11, 2000 meeting, and authorized appropriate officers of the Company to do such further acts and to execute such documents as may be necessary or advisable to effectuate the purposes of such approvals; and

    WHEREAS, the Committee desires to revise the language of the Plan document to clarify:

(i)

that participants who first become eligible for a service pension in 1998 and who retire on or after January 1, 1998 and before January 1, 2000, the benefit payable shall be derived from the Participant's December 31, 1997 account balance (prior to the one-time increase), credited with service credits, supplemental credits, additional credits, and interest credits;



(ii)

that the lump sum option is not available for disability pensions; and



(iii)

the use of GATT assumptions in the calculation of minimum account balances before and after January 1, 2000.

    NOW, THEREFORE, the Committee hereby approves the following amendments of the Plan.

1.

    Section 6.02 of the Plan is amended by deleting the first sentence of subparagraph 6.02(a)(iii) and substituting therefor the following:

"With respect to a Participant who first becomes eligible for a service pension in 1998 and who retires on or after January 1, 1998 and before January 1, 2000, the benefit payable shall be derived from the Participant's December 31, 1997 account balance (prior to the one-time increase), credited with service credits, supplemental credits, additional credits, and interest credits at the rate of 4 percent per year, compounded annually, and converting such amount to a lifetime annuity using the appropriate factor from the table set forth in Appendix C, which shall be based on the BellSouth Management Mortality Tables."

2.

    Section 6.02(b) of the Plan is amended by adding at the end thereof the following:

"The disability pension is not payable as a lump sum settlement under the provisions of Section 7.08."

3.

    Section 7.08 of the Plan is amended by deleting subparagraph 7.08(d)(ii) in its entirety and substituting therefor the following:

"For a Participant whose Pension Commencement Date occurs before January 1, 2000, the monthly benefit based on the Minimum Account Balance, calculated in accordance with subparagraph 6.02(a)(ii)."

4.

    Section 7.08 of the Plan is amended by adding subparagraph 7.08(e)(iii) as follows:

"For a Participant whose Pension Commencement Date occurs on or after January 1, 2000, the monthly benefit based on the Minimum Account Balance, calculated in accordance with subparagraph 6.02(a)(ii)."

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5.

    Any other provisions of the Plan not amended herein shall remain in full force and effect.

    This Amendment shall be effective as of February 11, 2000.

By: /s/ RICHARD D. SIBBERNSEN

    Richard D. Sibbernsen
Vice President—Human Resources

Date: December 15, 2000

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AMENDMENT TO THE BELLSOUTH PERSONAL RETIREMENT ACCOUNT PENSION PLAN
1.
2.
3.
4.
5.

EX-10.Q-10

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Exhibit 10q-10

AMENDMENT TO THE BELLSOUTH PERSONAL
RETIREMENT ACCOUNT PENSION PLAN

    WHEREAS, BellSouth Corporation (the "Company") sponsors the BellSouth Personal Retirement Account Pension Plan (the "Plan"), which was amended and restated effective January 1, 1998, and subsequently amended from time to time; and

    WHEREAS, the Executive Nominating Compensation and Human Resources Committee (the "Committee") of the Board of Directors of BellSouth Corporation, at its February 28, 2000 meeting, adopted a resolution to amend the Plan to provide an additional credit for the 2000 Plan Year equal to 1% of each Plan participant's 2000 compensation; and

    WHEREAS, the Committee authorized appropriate officers of the Company to do such further acts and to execute such documents as may be necessary or advisable to effectuate the purposes of such resolution; and

    WHEREAS, the Company now desires to revise the Plan document to reflect such amendment;

    NOW, THEREFORE, pursuant to the authority delegated by the Committee as referred to above, the undersigned officer approves the following to reflect such amendment of the Plan:

1.

    Amend Section 3 of the Plan by adding the following sentence at the end of Subparagraph 3.05(a):

"The Board has approved an additional credit for the 2000 Plan Year equal to the Participant's Compensation multiplied by one percent, and this additional credit shall be credited to each Participant's account as of the last day of such Plan Year."

2.

    Any other provisions of the Plan not amended herein shall remain in full force and effect.

    This Amendment shall be effective as of January 1, 2000.

By: /s/ RICHARD D. SIBBERNSEN

    Richard D. Sibbernsen
Vice President—Human Resources

Date: December 15, 2000

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2.

EX-10.Q-11

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Exhibit 10q-11

AMENDMENT TO THE BELLSOUTH PERSONAL
RETIREMENT ACCOUNT PENSION PLAN

    WHEREAS, BellSotuh Corporation (the "Company") sponsors the BellSouth Personal Retirement Account Pension Plan (the "Plan"), which was amended and restated effective January 1, 1998, and subsequently amended from time to time; and

    WHEREAS, L.M. Berry and Company adopted the Plan subject to certain modifications described in Schedule 2 of the Plan; and

    WHEREAS, pursuant to Section 15.01 of the Plan, the BellSouth Employees' Benefit Claim Review Committee (the "Committee") is authorized to adopt nonmaterial amendments to the Plan; and

    WHEREAS, the Committee approved, at its February 11, 2000 meeting, amendment to the Plan to provide the interest crediting rate of 6.15% for the L.M. Berry and Company participants for the 2000 Plan Year; and

    WHEREAS, the Committee authorized Richard D. Sibbernsen, Chairman of the Committee, to approve plan amendment language consistent with such approval and to execute documents in connection therewith;

    NOW, THEREFORE, the Committee hereby approves the following amendment of the Plan:

    Amend Schedule 2 of the Plan for L.M. Berry and Company by adding at the end of Paragraph 4(f) the following:

"As of the last day of Plan Year 2000, each Participant's account shall be credit with interest at the rate of 6.15% under the terms of the Plan."

    Any other provisions of the Plan not amended herein shall remain in full force and effect.

    This Amendment shall be effective as of January 1, 2000.

By:	/s/ RICHARD D. SIBBERNSEN Richard D. Sibbernsen Vice President—Human Resources
Date: December 15, 2000

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AMENDMENT TO THE BELLSOUTH PERSONAL RETIREMENT ACCOUNT PENSION PLAN

EX-10.V-1

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Exhibit 10v-1

ANNEX III

THE AMENDED AND RESTATED
BELLSOUTH CORPORATION STOCK PLAN
EFFECTIVE APRIL 24, 1995
AS AMENDED

ARTICLE I

Purpose

    The purpose of this Plan is to promote the interests of BellSouth by granting stock-related Awards to Eligible Employees and Non-Employee Directors to:

    (1) attract and retain Eligible Employees and Non-Employee Directors;

    (2) provide Eligible Employees and Non-Employee Directors with long term financial incentives to increase the value of BellSouth; and

    (3) provide Eligible Employees and Non-Employee Directors with a stake in the future of BellSouth which corresponds to the stake of each of BellSouth's shareowners.

Only Eligible Employees and Non-Employee Directors shall be eligible for Awards under this Plan.

ARTICLE II

Definitions

    2.1Definitions.  Each term set forth in this Article II shall have the respective meaning set forth opposite such term for purposes of this Plan, and when the defined meaning is intended the term is capitalized.

    "Additional Option" means an Option granted to a Non-Employee Director pursuant to Section 6.4 based upon his or her level of Stock ownership.

    "Administrator" means the Compensation Committee, the Director Committee or the Company Administrator, as applicable.

    "Agreement" means the written agreement which sets forth the terms and conditions of the grant of an Award as provided in this Plan and such additional terms and conditions, not inconsistent with this Plan, as the Administrator determines are appropriate.

    "Award" means an Option, SAR, Restricted Share, Performance Share, Dividend Equivalent Right or Stock Payment granted to a Participant under this Plan.

    "Basic Option" means an Option granted to a Non-Employee Director pursuant to Section 6.3.

    "BellSouth" means BellSouth Corporation, a Georgia corporation.

    "Beneficiary" means the person entitled to receive any payments or exercise any rights following the death of a Participant as determined pursuant to Section 10.5.

    "BLS Share" means one share of BLS Stock.

    "BLS Stock" means (i) prior to a Tracking stock transaction, the par value $1 per share common stock of BellSouth and (ii) after a Tracking Stock Transaction, the BellSouth Corporation—BLS Group Common Stock, par value $1 per share.

    "Board" means the Board of Directors of BellSouth.

    "Change in Control" means the occurrence of any of the following:

    (i) any "person" (as such term is defined in the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of BellSouth (or of another entity owned directly or indirectly

III-1

by the shareholders of BellSouth in substantially the same proportions as their ownership of stock of BellSouth), becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of BellSouth representing 20% or more of the total voting power represented by BellSouth's then outstanding voting securities;

    (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board and any new director whose election by the Board or nomination for election by BellSouth's shareholders was approved by a vote of at least two-thirds of the directors who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

    (iii) the consummation of a merger, plan of reorganization, consolidation, share exchange, or other transaction, in one or a series of related transactions, involving BellSouth, if immediately following such merger, plan of reorganization, consolidation, share exchange, or other transaction or transactions the holders of the voting securities of BellSouth outstanding immediately prior thereto hold securities representing 70% or less of the combined voting power represented by the voting securities of BellSouth or such surviving entity outstanding immediately after such merger, plan of reorganization, consolidation, share exchange, or other transaction or transactions;

    (iv) the consummation of a transaction involving the sale or other disposition by BellSouth or one or more of its subsidiaries (defined for purposes of this subparagraph (iv) only as any corporation in which 50% or more of the total combined voting power of all classes of stock is owned directly or indirectly by BellSouth and any joint venture, partnership, limited liability company, or other similar entity of which 50% or more of the capital or profits interest is owned directly or indirectly by BellSouth), in one or a series of related transactions, of interests in an entity or entities, or of assets, which for the most recent audited twelve-month period produced total operating revenues or net income aggregating more than 30% of the total operating revenues or net income of BellSouth and its subsidiaries (taken as a whole), if following such transaction or transactions, any such entity is no longer a subsidiary or such assets are no longer held by a subsidiary;

    (v) the dissolution of BellSouth or the sale of all or substantially all of the assets of BellSouth; or

    (vi) the consummation of any other transaction which a majority of the Board, in its sole and absolute discretion, shall determine constitutes a Change in Control, for this purpose.

    "Code" means the Internal Revenue Code of 1986, as amended from time to time.

    "Company Administrator" means the chief executive officer of BellSouth, the senior officer of BellSouth responsible for human resources matters or such other person or persons as are designated by the Compensation Committee to administer the Plan on behalf of Participants who are neither Non-Employee Directors nor Covered Employees.

    "Compensation" means all compensation payable to a Non-Employee Director for service to BellSouth as a director, other than reimbursement for expenses, including retainer fees for service on, and fees for attendance at meetings of, the Board and any committees thereof.

    "Compensation Committee" means the Executive Nominating, Compensation and Human Resources Committee of the Board, or any successor committee of the Board which administers this Plan as provided in Article V.

    "Covered Employee" means with respect to any grant of an Award a Participant whom the Compensation Committee deems may be or become a covered employee as defined in Section 162(m)(3) of the Code for any year that such Award may result in remuneration to the Participant and for which year such Participant may receive remuneration over $1 million which would not be deductible under Section 162(m) of the Code but for the provisions of the Plan and any other "qualified performance-based compensation" plan (as defined under Section 162(m) of the Code) of BellSouth; provided, however, that the Compensation Committee may determine that a Participant has ceased to be a Covered Employee prior to Settlement of any Award.

    "Director Committee" means the Committee on Directors and Corporate Governance of the Board, or any successor committee of the Board which administers this Plan as provided in Article V.

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    "Dividend Equivalent Right" means a right, granted to a Participant under Section 9.4, to receive cash or Shares based on the value of dividends paid with respect to a Share.

    "Eligible Employee" means any employee (including an Officer, Executive Officer or director who is an employee and including for purposes other than ISOs any former employee) of BellSouth or any Subsidiary. Such term also includes for purposes other than ISOs any non-employee advisor, consultant or independent contractor to BellSouth or any Subsidiary, and any references to employment or termination of employment under this Plan shall be deemed to apply to such an advisor, consultant or independent contractor, for purposes of this Plan only, as if the services of such person constitute employment services.

    "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

    "Executive Officer" means an Officer or other employee or former employee of BellSouth or a Subsidiary who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

    "Fair Market Value" for any day means (i) the average of the high and low daily sale prices of a Share on the New York Stock Exchange for that day or, if there are no sales on such day, for the most recent prior day on which a Share was sold on the New York Stock Exchange or (ii) the value of a Share determined in such other manner which reasonably reflects the fair value of a Share on that day as shall be determined by the Administrator.

    "IPO" means the initial Public Offering of the Latin America Stock.

    "ISO" or "Incentive Stock Option" means an option granted under this Plan to purchase Shares which is intended by BellSouth to satisfy the requirements of Code Section 422.

    "Latin America Share" means one share of Latin America Stock.

    "Latin America Stock" means the BellSouth Corporation—Latin America Group Common Stock, par value $1 per share.

    "Non-Employee Director" means a member of the Board who is not an Officer or employee of BellSouth or its affiliates.

    "NQSO" or "Non-Qualified Stock Option" means an option granted under this Plan to purchase Shares which is not intended by BellSouth to be treated as an ISO.

    "Number of Shares Issuable with Respect to the Inter-Group Interest" has the meaning set forth in the Amended and Restated Articles of Incorporation.

    "Officer" means any executive of BellSouth or any Subsidiary who is a member of the executive compensation group under BellSouth's compensation practices (but not necessarily an Executive Officer).

    "Option" means an NQSO or ISO granted under this Plan.

    "Option Price" means the price determined in accordance with Section 6.6 which shall be paid to purchase one Share upon the exercise of an Option granted under this Plan.

    "Parent Corporation" means any corporation which is a parent of BellSouth within the meaning of Code Section 424(e).

    "Participant" means an Eligible Employee or a Non-Employee Director to whom an Award is made.

    "Performance Objective" means, as described in Section 10.2, a performance objective specified in the Agreement for a Performance Share, or for any other Award which the Administrator determines to make subject to a performance objective, upon which the vesting or Settlement of such Award is conditioned.

    "Performance Period" means the period of time specified in an Agreement over which Performance Shares are to be earned.

    "Performance Share" means a bookkeeping entry that records the equivalent of one share awarded pursuant to Section 9.2 of this Plan.

    "Plan" means this Amended and Restated BellSouth Corporation Stock Plan, as effective as of December 5, 2000 and as thereafter amended from time to time.

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    "Prior Plan" means the BellSouth Corporation Stock Option Plan, the BellSouth Enterprises, Inc. Key Manager Incentive Compensation Plan, the BellSouth Executive Long Term Incentive Plan, the BellSouth Corporation Shareholder Return Cash Plan, the BellSouth Corporation Key Manager Shareholder Return Cash Plan and the BellSouth Corporation Non-Employee Director Stock Option Plan, as applicable.

    "Prior Stock Plan" means the BellSouth Corporation Non-Employee Director Stock Plan.

    "Public Offering" means the first day as of which sales of Latin America Stock are made to the public in the United States pursuant to an underwritten public offering of the Latin America Stock.

    "Restricted Period" means the period of time from the date of grant of a Restricted Share until the lapse of restrictions attached thereto under the terms of the applicable Agreement.

    "Restricted Share" means a Share which has been awarded to a Participant subject to restrictions under Section 8.1.

    "Retainer Multiple" has the meaning set forth in Section 6.4(a).

    "Rule 16b-3" means Rule 16b-3 under the Exchange Act.

    "SAR" or "Stock Appreciation Right" means the contractual right granted to a Participant pursuant to Section 7.1 to receive a payment upon the exercise of such right which reflects the appreciation in the Fair Market Value of the number of Shares for which such right was granted.

    "SAR Exercise Date" means the date on which the exercise of an SAR occurs under the related Agreement.

    "SAR Exercise Price" means the Fair Market Value of a Share on the SAR Exercise Date.

    "SAR Grant Price" means the price which would have been the Option Price for one Share if the SAR had been granted as an Option or, if the SAR is granted in tandem with an Option, the Option Price for the related Option.

    "Settlement Date" means:

    (i) with respect to any Option that has been exercised in whole or in part, the date or dates upon which Shares are to be delivered to the Participant and the Option Price therefor paid;

    (ii) with respect to any SARs that have been exercised, the date or dates upon which a cash payment is to be made to the Participant, or in the case of SARs that are to be settled in Shares, the date or dates upon which such Shares are to be delivered to the Participant;

    (iii) with respect to Performance Shares, the date or dates upon which cash or Shares are to be delivered to the Participant;

    (iv) with respect to Dividend Equivalent Rights, the date upon which payment thereof is to be made; and

    (v) with respect to Stock Payments, the date upon which payment thereof is to be made, in each case, determined in accordance with the terms of this Plan and the Agreement under which any such Award was made.

    "Share" means a BLS Share or Latin America Share, as the case may be.

    "Stock" means BLS Stock or Latin America Stock, as the case may be.

    "Stock Payment" means payment of compensation in the form of Shares pursuant to Section 9.3.

    "Subsidiary" means:

    (i) with respect to an Award other than an ISO, any corporation, joint venture or partnership in which BellSouth owns directly or indirectly (A) with respect to a corporation, stock possessing at least 10% of the total combined voting power of all classes of stock in the corporation, or (B) in the case of a joint venture or partnership, a 10% interest in the capital or profits of such joint venture or partnership; and

    (ii) any corporation which is a subsidiary corporation (within the meaning of Code Section 424(f)) of BellSouth by reason of being in an unbroken chain of corporations (beginning with BellSouth) in which each

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corporation in the unbroken chain (except the last such corporation) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

    "Ten Percent Shareowner" means a person who owns (after taking into account the attribution rules of Code Section 424(d)) more than 10% of the total combined voting power of all classes of stock of either BellSouth, or Subsidiary or Parent Corporation.

    "Tracking Stock Transactions" mean the IPO or any other transaction that provides for the issuance of the Latin America Stock.

    2.2References.  All pronouns are masculine, solely for ease of reading, and should be read as feminine where applicable. Unless the context clearly requires otherwise, the singular shall include the plural and the plural shall include the singular. All references to sections of the Code or other laws or regulations shall include amendments and successor provisions thereto unless otherwise specifically stated or clearly required by the context.

ARTICLE III

Shares Subject to Plan

    3.1Aggregate Limits.

    (a)BLS Shares.  The aggregate number of BLS Shares with respect to which the grant of Awards, other than Stock Payments and Awards to Non-Employee Directors, may be made in any calendar year under this Plan shall not exceed 1.25% of the total number of BLS Shares outstanding at the time of such grant; provided, however, that the number of such BLS Shares with respect to which grants are not made in any calendar year shall be available for grant in a subsequent calendar year; provided, further, however, that the number of BLS Shares available for such Awards shall be increased by the excess of the number of shares available under the Plan in calendar years prior to the effective date set forth in Section 4.1 for such Awards over the number of shares with respect to which grants of such Awards were made in calendar years prior such effective date. Within such total, the aggregate number of BLS Shares with respect to which the grant of Performance Shares and Restricted Shares may be made in any calendar year under this Plan shall not exceed in combination .25% of the total number of BLS Shares outstanding at the time of grant. Furthermore, in no event shall ISOs with respect to more than 4,000,000 BLS Shares be granted under this Plan. The aggregate number of BLS Shares with respect to which the grant of Stock Payments may be made in any calendar year under this Plan shall not exceed .125% of the total number of BLS Shares outstanding at the time of grant. Finally, the aggregate number of BLS Shares with respect to which Awards, other than Stock Payments, may be made to Non-Employee Directors shall not exceed 1,200,000, and the aggregate number of BLS Shares with respect to which Stock Payments may be granted to Non-Employee Directors shall not exceed 700,000.

    (b)Latin America Shares.  The aggregate number of Latin America Shares with respect to which the grant of Awards, other than Stock Payments and Awards to Non-Employee Directors, may be made in any calendar year under this Plan shall not exceed 1.25% of the total number of Latin America Shares outstanding at the time of such grant; provided, however, that the number of such Latin America Shares with respect to which grants are not made in any calendar year shall be available for grant in a subsequent calendar year. Within such total, the aggregate number of Latin America Shares with respect to which the grant of Performance Shares and Restricted Shares may be made in any calendar year under this Plan shall not exceed in combination .25% of the total number of Latin America Shares outstanding at the time of grant. Furthermore, in no event shall ISOs with respect to more than 4,000,000 Latin America Shares be granted under this Plan. The aggregate number of Latin America Shares with respect to which the grant of Stock Payments may be made in any calendar year under this Plan shall not exceed .125% of the total number of Latin America Shares outstanding at the time of grant. Finally, the aggregate number of Latin America Shares with respect to which Awards, other than Stock Payments, may be made to Non-Employee Directors shall not exceed 1,200,000, and the aggregate number of Latin America Shares with respect to which Stock Payments may be granted to Non-Employee Directors shall not exceed 700,000.

    For purposes of this Section 3.1, the total number of Latin America Shares outstanding shall include the sum of (i) the number of Latin America Shares issued and outstanding; and (ii) the Number of Shares Issuable

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with Respect to the Inter-Group Interest in the Latin America Group held by the BLS Group. In the event of a distribution of Latin America Shares to holders of BLS Shares, any grant of an Award of Latin America Shares to adjust an Award of BLS Shares to reflect such distribution shall not reduce the number of Latin America Shares available for grant under the Plan.

    3.2Individual Limits.

    (a)BLS Shares.  The number of BLS Shares with respect to which the grant of Awards, other than Stock Payments, may be made to any Participant in any calendar year under this Plan shall not exceed 2,500,000 BLS Shares. Within such total, the number of BLS Shares with respect to which the grant of each of Performance Shares, Restricted Shares and Dividend Equivalent Rights may be made to any Participant in any calendar year under this Plan shall not exceed in combination 500,000 BLS Shares. Finally, the number of BLS Shares with respect to which the grant of Stock Payments may be made to any Participant in any calendar year under this Plan shall not exceed 250,000 BLS Shares.

    (b)Latin America Shares.  The number of Latin America Shares with respect to which the grant of Awards, other than Stock Payments, may be made to any Participant in any calendar year under this Plan shall not exceed 2,500,000 Latin America Shares. Within such total, the number of Latin America Shares with respect to which the grant of each of Performance Shares, Restricted Shares and Dividend Equivalent Rights may be made to any Participant in any calendar year under this Plan shall not exceed in combination 500,000 Latin America Shares. Finally, the number of Latin America Shares with respect to which the grant of Stock Payments may be made to any Participant in any calendar year under this Plan shall not exceed 250,000 Latin America Shares. In the event of a distribution of Latin America Shares to holders of BLS Shares, any grant of an Award of Latin America Shares to adjust an Award of BLS Shares to reflect such distribution shall not reduce the number of Latin America Shares available for grant to any Participant under the Plan for the calendar year in which such distribution occurs.

    3.3Application of Limits.  No grant of an Award shall be made at any time during a calendar year to the extent the number of Shares subject to such Award and the number of Shares subject to Awards previously granted during such year (or during the life of the Plan in the case of ISOs) would exceed a limit in Section 3.1 or 3.2. The number of Shares subject to an Award shall be:

    (i) the number of Shares subject to an Option or subject to a SAR that is not granted in tandem with an Option (including a SAR that can be settled in cash);

    (ii) the number of Shares subject to a grant of Restricted Shares;

    (iii) the maximum number of Shares that could be issued upon Settlement of a grant of Performance Shares (or upon which a cash payment could be based) as determined under the Agreement for such grant and this Plan;

    (iv) the number of Shares with respect to which Dividend Equivalent Rights are granted, but excluding Shares subject to Dividend Equivalent Rights which are granted in tandem with another Award grant which otherwise does not provide for the payment of dividends to the Participant; and

    (v) the number of Shares that are paid as a Stock Payment.

    3.4Adjustments.  The limits in Sections 3.1 and 3.2 shall be adjusted as provided in Section 10.6. If any Shares subject to an Award are forfeited or such Award otherwise terminates, such number of Shares shall be available for new Awards under the Plan. In addition, Shares surrendered in payment of any exercise or purchase price or in payment of taxes relating to any such Award shall be deemed to constitute Shares not delivered to the Participant and shall be deemed to be available for new Awards under the Plan for purposes of Section 3.1 only.

    3.5Shares.  BellSouth shall reserve from time to time Shares for use under this Plan, and such Shares shall be reserved to the extent BellSouth deems appropriate from authorized but unissued Shares and from Shares which have been reacquired by BellSouth.

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ARTICLE IV

Effective Date And Duration

    4.1Effective Date.  The effective date of the amendment and restatement of this Plan shall be December 5, 2000. This Plan, as amended and restated, will become effective only if approved by the shareholders of BellSouth; provided, however, that the provisions of this Plan, as amended and restated, which relate to Latin America Stock will become effective only upon a Tracking Stock Transaction.

    4.2Prior Plan.  This Plan is a successor to each Prior Plan and the Prior Stock Plan. No further grants of stock options, stock appreciation rights, performance shares, dividend equivalent rights, shareholder return cash units or other interests shall be made (i) under the Prior Plans on or after April 24, 1995 and (ii) under the Prior Stock Plan on or after December 5, 2000, if the Plan is approved by the shareholders. Options and stock appreciation rights, or performance shares, dividend equivalent rights, shareholder return cash units or other outstanding interests under a Prior Plan or Prior Stock Plan shall continue to be governed by the terms of the Prior Plan or Prior Stock Plan, as the case may be; provided, that, effective on and after September 23, 1996, terms of this Plan shall constitute an amendment to the terms of a Prior Plan or Prior Stock Plan, and to the terms of outstanding grants under a Prior Plan or Prior Stock Plan where applicable, when expressly so provided in this Plan.

    4.3Duration.  This Plan shall terminate on December 31, 2004, unless earlier terminated by the Board pursuant to Article XI. No Award shall be granted after the date this Plan terminates. The applicable terms of this Plan, and any terms and conditions applicable to Awards granted prior to such date, shall survive the termination of the Plan and continue to apply to such Awards.

ARTICLE V

Administration

    5.1Administrator.  The Plan shall be administered by the Compensation Committee with respect to Covered Employees, the Director Committee with respect to Non-Employee Directors and, subject to regulations and guidelines that may be established by the Compensation Committee, by the Company Administrator with respect to all other Eligible Employees. The Compensation Committee or the Director Committee may adopt such regulations and guidelines as it deems are necessary or appropriate for the administration of the Plan. Subject to such rules, regulations or guidelines, the Company Administrator shall have the power to adopt rules, regulations and guidelines to permit it to administer the Plan with respect to Eligible Employees other than Covered Employees.

    5.2Compensation Committee and Director Committee Responsibilities.  The Compensation Committee shall consist solely of at least two individuals who are intended to qualify as "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act (or any successor rule thereto) and "outside directors" within the meaning of Section 162(m) of the Code (or any successor section thereto). No member of the Compensation Committee or the Director Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or Awards. All members of the Compensation Committee and the Director Committee shall be fully protected by BellSouth, to the fullest extent permitted by applicable law, in respect of any such action, determination or interpretation.

    5.3Administrator Responsibilities.  The Administrator shall (a) determine the amount of all grants of Awards under this Plan, (b) determine the terms and conditions of grant Agreements and all election and other forms, which terms and conditions shall not be inconsistent with this Plan, (c) interpret the Plan and (d) make all other decisions relating to the operation of the Plan. The Administrator may adopt, amend or rescind rules or guidelines as it deems are appropriate to implement the Plan and correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Administrator deems necessary or desirable.

    5.4Determinations.  All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Participants, BellSouth and all other interested persons.

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ARTICLE VI

Options

    6.1Grant.  Subject to the terms and conditions of this Plan, the Administrator from time to time may grant such Options to such Eligible Employees and such Non-Employee Directors to purchase Shares as the Administrator acting in its sole discretion deems are appropriate under the circumstances. Each grant of an Option shall be evidenced by an Agreement, and each Agreement shall incorporate such terms and conditions as the Administrator in its sole discretion deems are consistent with the terms of this Plan, including conditions on the exercise of such Option which relate to the employment or service of the Participant or the requirement that the Participant exchange a prior outstanding Option and/or SAR; provided that, if the Administrator grants an ISO and NQSO to an Eligible Employee, the right of the Eligible Employee to exercise one such Option shall not be conditioned on his failure to exercise the other such Option. The Administrator may issue new Options equal to the number of Shares surrendered by a Participant upon exercise of a previously granted stock option.

    6.2Special Rules for Incentive Stock Options.  The grant of ISOs shall be subject to the following additional restrictions:

    (a)Eligible Individuals.  Incentive Stock Options shall only be granted to an Eligible Employee who at the time of grant is a common law employee of BellSouth or a Subsidiary.

    (b)Time of Grant.  No Incentive Stock Option shall be granted pursuant to this Plan more than 10 years after April 24, 1995.

    (c)Annual Limit.  The aggregate Fair Market Value (determined at the time the ISO is granted) of the Shares with respect to which one or more ISOs are exercisable for the first time by a Participant during any calendar year under the Plan or with respect to which any incentive stock options described in Section 422 of the Code are so first exercisable under any other stock plan of BellSouth or a Parent Corporation or any Subsidiary shall not exceed $100,000 or such other maximum amount permitted under Section 422 of the Code.

    (d)Option Term.  The term of an ISO shall not exceed 10 years from the date of grant.

    (e)Ten Percent Shareholder.  If any Participant to whom an ISO is to be granted pursuant to the provisions of the Plan is, on the date of grant, a Ten Percent Shareholder, then the following special provisions shall be applicable to the ISO granted to such individual:

    (i) the Option Price of shares subject to such ISO shall not be less than 110% of Fair Market Value on the date of grant; and

    (ii) the Option shall not have a term in excess of 5 years from the date of grant.

Any Option purporting to constitute an ISO in violation of the restrictions in this Section 6.2 shall constitute a NQSO.

    6.3Non-Employee Director Basic Options.  Unless otherwise determined by the Director Committee, on the date of each BellSouth annual shareholders' meeting, each individual who is at that time serving as a Non-Employee Director, whether or not such individual is first elected as a Board member at that meeting or whether or not such individual is standing for reelection as a Board member at that meeting, shall be granted an Option to purchase BLS Shares and/or an Option to purchase Latin America Shares as determined by the Director Committee.

    6.4Non-Employee Director Additional Options.

    (a) Unless otherwise determined by the Director Committee, each Non-Employee Director who receives a grant of a Basic Option under Section 6.3 on the date of an annual shareholders' meeting shall be granted Additional Options to purchase BLS Shares and/or Latin America Shares on such date if:

    (i) the number of BLS Shares and Latin America Shares owned by such Non-Employee Director (as determined under paragraph (b) below) as of the immediately preceding December 31 (adjusted to appropriately reflect the Tracking Stock Transactions) exceeds

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    (ii) the sum of (A) the number of BLS Shares and Latin America Shares determined by: (I) dividing a portion of the product of (a) five multiplied by (b) the amount of the annual retainer for Board members in effect on such December 31 (the "Retainer Multiple") by the representative BLS Share price on such December 31, and (II) dividing a portion of the Retainer Multiple by the representative Latin America Share price on such December 31 (as determined under paragraph (c) below) and (B) the number of BLS Shares and Latin America Shares subject to Additional Options previously granted to such Non-Employee Director under this Section 6.4 (whether or not any such previously granted Additional Option has been exercised or has expired). The portion of the Retainer Multiple to be applied to BLS Shares and Latin America Shares shall be in proportion to the number of BLS Shares and Latin America Shares granted as Basic Options for such year.

Such Additional Option shall be for the number of BLS Shares and/or Latin America Shares equal to the excess of (A) one half of the number by which Section 6.4(a)(i) exceeds Section 6.4(a)(ii)(A) (rounded to the next highest whole number) over (B) Section 6.4(a)(ii)(B), limited to a maximum annual grant of BLS Shares and Latin America Shares as determined by the Director Committee.

    (b) For purposes of this Section 6.4 only, a Non-Employee Director shall be deemed to "own" the number of Shares equal to the sum of:

    (i) those BLS Shares and Latin America Shares, whether registered in the owner's name or in nominee name, which (1) are owned by the Non-Employee Director or his spouse (or jointly) or (2) are owned by a trust with respect to which the Non-Employee Director or his spouse (or both) contributed the BLS Shares or Latin America Shares (or the money or other property used by the trustee to purchase the BLS Shares and/or Latin America Shares) and also holds the power to vote and dispose of such Shares; and

    (ii) the number of stock units (i.e., bookkeeping units which reflect the price changes and dividends on a Share) credited to the Non-Employee Director pursuant to any deferred compensation plan maintained by BellSouth.

    (c) For purposes of this Section 6.4 only, the representative price of a BLS Share or Latin America Share on any December 31 will equal the average of the Fair Market Value of such Share for the last five trading days on the New York Stock Exchange for the year ending that December 31 and the first five such trading days in the next succeeding year.

    6.5Other Options.  The Administrator may establish rules with respect to, and may grant to Eligible Employees or Non-Employee Directors, Options which comply with any amendment to the Code providing for special tax benefits for stock options made after the effective date of this Plan, provided such rules otherwise are consistent with the terms of this Plan.

    6.6Option Price.  The Option Price for each Share subject to an Option shall not be less than the greater of (i) the par value of a Share or (ii) the Fair Market Value of a Share on the date the Option is granted.

    6.7Option Period and Exercisability.

    (a)Eligible Employees.  Each Option granted to an Eligible Employee under this Plan shall be exercisable at such time or times as set forth in the related Agreement over the period which begins on the date such Option is granted, and each Option shall expire automatically on the earliest of (i) the date such Option is exercised in full, (ii) the date such Option expires in accordance with the terms of the related Agreement or (iii) the date such Option is forfeited or deemed to expire upon the exercise of any tandem SAR. An Agreement may provide for the exercise of an Option after the employment of an Eligible Employee has terminated for any reason whatsoever, including retirement, death or disability, but such provision shall have no force or effect whatsoever and shall be inoperative if the Administrator determines that such termination was for "cause" or was a result of misconduct in connection with his employment. Upon such termination, the Option shall be forfeited.

    (b)Non-Employee Directors.

    (i) Unless otherwise provided in an Agreement, an Option granted to a Non-Employee Director shall become exercisable on the first anniversary of the Grant Date; provided, however, that in the event that, prior to such first anniversary, (1) the Non-Employee Director terminates his service on the Board by

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reason of (A) death, (B) disability, or (C) retirement (which shall mean termination of service on the Board after the Non-Employee Director has attained age 55 and completed at least five years of service as a director on the Board), or (2) a Change in Control shall occur, then an Option shall become immediately exercisable upon the occurrence of such event or, if later, the expiration of the six-month period following the Grant Date. Subject to the foregoing, an Option shall be exercisable at any time in whole or in part (but if in part, in an amount equal to at least 100 Shares or, if less, the number of Shares remaining to be exercised under the Option) on any business day of BellSouth before the date such Option expires under this Section 6.7.

    (ii) Unless otherwise provided in an Agreement, an Option shall expire on the earlier of:

    (1) the first date on or after the Grant Date and prior to a Change in Control on which the Non-Employee Director (A) resigns from or is not re-elected to the Board prior to being eligible for retirement under clause (b)(i)(1)(c) of this Section 6.7; (B) resigns for the purpose of accepting, or retires and subsequently accepts, a directorship or employment, or becomes associated with, employed by or renders service to, or owns an interest in (other than as a shareholder with a less than 5% interest in a publicly traded company) any business that is competitive with any BellSouth company or with any other business in which any of the BellSouth companies have a substantial direct or indirect interest; or (C) resigns as a result of an interest or affiliation which would prohibit continued service as a director;

    (2) the date the Option (or a tandem SAR) has been exercised in full; or

    (3) one day after the expiration of the ten-year period which begins on the Option Grant Date or, in the case of a Non-Employee Director who dies within six months prior to such day, the last day of the six month period which begins on the date of the Non-Employee Director's death.

    6.8Method of Exercise.

    (a)Exercise of Option.  An Option may be exercised by properly completing and actually delivering to BellSouth an exercise form prescribed by the Administrator for this purpose, together with payment in full of the Option Price for the Shares the Participant desires to purchase through such exercise in the manner specified in the exercise form. Payment may be made:

    (i) in cash or its equivalent (e.g., by check);

    (ii) in BLS Shares or Latin America Shares, as the case may be, having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Administrator, provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Administrator or generally accepted accounting principles);

    (iii) partly in cash and partly in such Shares;

    (iv) through the delivery of irrevocable instructions to a broker to deliver promptly to BellSouth an amount equal to the aggregate Option Price for the Shares being purchased; or

    (v) in the form of other property as determined by the Administrator.

Any Shares which are tendered in payment shall be valued at their Fair Market Value on the Settlement Date.

    (b)Attestation.  Wherever in this Plan or any Agreement a Participant is permitted to pay the Option Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Administrator, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case BellSouth shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

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ARTICLE VII

Stock Appreciation Rights

    7.1Grant.  Subject to the terms and conditions of this Plan, the Administrator may grant a SAR to any Eligible Employee or Non-Employee Directors either (i) in tandem with the grant of an ISO in the case of an Eligible Employee, (ii) in tandem with the grant of an NQSO or (iii) independent of the grant of an ISO or NQSO. The Administrator may grant a SAR to each Non-Employee Director in tandem with each grant of a Basic Option and an Additional Option. Each grant of a SAR which is in tandem with the grant of an ISO or an NQSO shall be evidenced by the same Agreement as the ISO or NQSO which is granted in tandem with such SAR and such SAR shall relate to the same number of Shares as such Option. Each SAR which is granted independent of an ISO or NQSO shall be evidenced by a separate Agreement which shall state the number of Shares to which such SAR shall relate and such other terms and conditions as the Administrator in its sole discretion deems are consistent with the terms of this Plan, including conditions on the exercise of such SAR which relate to the employment or service of the Participant or the requirement that the Participant exchange a prior outstanding Option and/or SAR.

    7.2Payment at Exercise.  Upon the settlement of a SAR in accordance with the terms of the related Agreement, the Participant shall (subject to the terms and conditions of this Plan and such Agreement) receive a payment equal to the excess, if any, of the SAR Exercise Price for the number of Shares of the SAR being exercised at that time over the SAR Grant Price for such Shares. Such payment may be made in whole Shares or in cash, or partially in Shares and partially in cash, as determined under the SAR Agreement. If payment is made in whole or in part in Shares, such Shares shall be valued for this purpose at the SAR Exercise Price on the date the SAR is exercised, and any payment in Shares which calls for a payment in a fractional Share automatically shall be paid in cash based on such valuation.

    7.3Special Terms and Conditions.  Each Agreement which evidences the grant of a SAR shall incorporate such terms and conditions as the Administrator in its absolute discretion deems are consistent with the terms of this Plan and the Agreement for the ISOs and NQSOs, if any, granted in tandem with such SAR except that (i) if a SAR is granted in tandem with an ISO or a NQSO, the SAR shall be exercisable only when the related ISO or NQSO is exercisable and (ii) the Participant's right to exercise a SAR granted in tandem with an ISO or NQSO shall be forfeited to the extent that he exercises the related ISO or NQSO and his right to exercise the ISO or NQSO shall be forfeited to the extent he exercises the related SAR, but any such forfeiture shall not count as a forfeiture for purposes of making the Shares subject to such Option or SAR again available for use under Article III.

ARTICLE VIII

Restricted Shares

    8.1Grant.  Subject to the terms and conditions of this Plan, the Administrator may grant Restricted Shares to any Eligible Employee or Nonemployee Director as provided in this Article VIII. Each grant of Restricted Shares shall be evidenced by an Agreement which shall state such terms and conditions as the Administrator deems are consistent with the terms of this Plan.

    8.2Restrictions.  Restricted Shares shall be subject to such conditions and restrictions as the Administrator shall determine and specify in the related Agreement, which may include, but are not limited to, continued employment or service with BellSouth or a Subsidiary and achievement of Performance Objectives, which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, or otherwise, as the Administrator may determine and so specify. Except to the extent restricted under the terms of the Plan and the Agreement relating to the Restricted Shares, a Participant granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon.

    8.3Forfeiture.  If a Participant fails to meet the terms and conditions of the Agreement for such Restricted Shares during the Restricted Period, Restricted Shares still subject to restrictions shall be forfeited, and all rights of the Participant to such Shares shall terminate without further obligation on the part of BellSouth. An Agreement may provide that the Restricted Period will end upon the retirement, death or disability of a Participant while an employee or director or upon such other event or events as the Administrator shall determine or may otherwise provide that such an event will not result in forfeiture of the Restricted Shares.

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    8.4Certificates for Shares.  Restricted Shares granted under the Plan may be evidenced in such manner as the Administrator shall determine. The Administrator may place a legend on the Share certificates referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the Share certificates, together with duly endorsed stock powers, in the custody of BellSouth or its transfer agent or to maintain evidence of Share ownership, together with duly endorsed stock powers, in a certificateless book-entry account with BellSouth's transfer agent.

    8.5Adjustments.  Shares distributed in connection with a stock split or stock dividend, and other property distributed as a dividend or pursuant to an adjustment under Section 10.6, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed.

ARTICLE IX

Other Stock Rights

    9.1 Grant. Subject to the terms and conditions of this Plan, the Administrator may grant Performance Shares, Stock Payments or Dividend Equivalent Rights as provided in this Article IX. A grant of Performance Shares and Dividend Equivalent Rights shall be evidenced by an Agreement, and a grant of Stock Payments may be evidenced by an Agreement, which Agreement shall contain such terms and conditions as the Administrator deems are consistent with the terms of this Plan.

    9.2 Performance Shares. Performance Shares shall become payable to a Participant based upon the achievement of specified Performance Objectives and upon such other terms and conditions as the Administrator may determine and specify in the Agreement evidencing such Performance Shares. Each grant shall satisfy the conditions for performance-based Awards under Section 10.2. A grant may provide for the forfeiture of Performance Shares in the event of termination of employment or other events, subject to exceptions for death, disability, retirement or other events, all as the Administrator may determine and specify in the Agreement for such grant, provided that no exception shall apply if the Administrator determines that the termination was for "cause" or was a result of misconduct in connection with his employment or service. Payment may be made at such time and in such form, either in cash or Shares, or a combination thereof, as the Administrator shall determine and specify in the Agreement.

    9.3 Stock Payments.

    (a) Eligible Employees. The Administrator may grant Stock Payments to an Eligible Employee as a bonus or additional compensation or in lieu of the obligation of BellSouth or a Subsidiary to pay cash compensation under other compensatory arrangements, with or without the election of the Eligible Employee. A Participant shall have all voting, dividend, liquidation and other rights with respect to Shares issued to the Participant as a Stock Payment upon the Participant becoming holder of record of such Shares; provided, however, the Plan Administrator may impose such restrictions on the assignment or transfer of such Shares as it deems are appropriate and specifies in an Agreement for such Stock Payment. A Stock Payment shall be subject to such other terms as the Administrator deems are consistent with the terms of this Plan and specifies in any Agreement for such Stock Payment.

    (b) Non-Employee Directors. The Director Committee may grant Stock Payments to a Non-Employee Director as additional compensation or in lieu of the obligation of BellSouth to pay cash compensation. In addition, unless otherwise determined by the Director Committee, for each date that a retainer payment otherwise is due to a Non-Employee Director, BellSouth shall pay such Non-Employee Director a Stock Payment for the number of BLS Shares and/or Latin America Shares, as determined by the Director Committee, equal to 50% of such retainer payment based upon the average of the high and low daily sales prices of a BLS Share and/or a Latin America Share on the New York Stock Exchange ("NYSE") for the period of five trading days ending on such retainer payment date (or the period of five trading days immediately preceding such date if the NYSE is closed on such date). Such Stock Payment will be made in lieu of the cash payment of such 50% of the retainer. Certificates or other evidence of all whole Shares will be delivered promptly following each Stock Payment. Any payment for a fractional Share automatically will be made in cash.

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    9.4 Dividend Equivalent Rights. The Plan Administrator may grant Dividend Equivalent Rights in tandem with the grant of Options, SARs, or Performance Shares that otherwise do not provide for the payment of dividends on the Shares subject to such Awards for the period of time to which such Dividend Equivalent Rights apply, or may grant Dividend Equivalent Rights that are independent of any such Award. A Dividend Equivalent Right granted in tandem with another Award may be evidenced by the Agreement for such other Award; otherwise, a Dividend Equivalent Right shall be evidenced by a separate Agreement. Payment may be made in cash or Shares, or a combination thereof, may be immediate or deferred, and may be subject to such employment, Performance Objectives or other conditions as the Administrator may determine and specify in the Agreement for such Dividend Equivalent Rights. The total payment attributable to a Share subject to a Dividend Equivalent Right shall not exceed 100% of the equivalent dividends payable with respect to a Share during the term of such Dividend Equivalent Right, taking into account any assumed reinvestment (including assumed reinvestment in Shares) or interest earnings on such equivalent dividends as determined under the Agreement in the case of deferred payment, provided that such percentage may increase to a maximum of 200% if the Dividend Equivalent Right is subject to a Performance Objective as described in Section 10.2.

ARTICLE X

Special Provisions Applicable to Awards

    10.1 Rule 16b-3 Compliance.

    (a) Six-Month Holding Period. Unless a Participant could otherwise exercise a derivative security or dispose of Shares delivered upon exercise of a derivative security granted under the Plan without incurring liability under Section 16(b) of the Exchange Act, (i) Shares delivered under the Plan other than upon exercise or conversion of a derivative security granted under the Plan shall be held for at least six months from the date of acquisition, and (ii), with respect to a derivative security granted under the Plan, at least six months shall elapse from the date of acquisition of the derivative security to the date of disposition of the derivative security (other than upon exercise or conversion) or its underlying equity security.

    (b) Reformation to Comply with Exchange Act Rules. It is the intent of BellSouth that this Plan comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-l(c)(3) under the Exchange Act in connection with any grant of Awards to, or other transaction by, a Participant who is subject to Section 16 of the Exchange Act (except for transactions exempted under alternative Exchange Act Rules). Accordingly, if any provision of this Plan or any Agreement relating to an Award does not comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such provision will be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability under Section 16(b).

    (c) Prior Plan Window Period SARs. Effective November 24, 1996, in light of the elimination by the Securities and Exchange Commission of the condition for exemption from Section 16(b) of the Exchange Act that stock appreciation rights be exercised for cash only during a specified "window period", outstanding stock appreciation rights tandem to non-qualified options issued under the BellSouth Corporation Stock Option Plan are amended to remove the window period restriction for cash exercise such that such stock appreciation rights granted in 1989 and 1990 are now exercisable for cash at any time and that such stock appreciation rights granted in all other years are now exercisable for either cash or Shares at any time, provided in all cases that such a stock appreciation right can only be exercised if the optionee meets all other applicable requirements for the exercise of such stock appreciation right under the terms of the Prior Plan and the applicable grant agreement, including any requirement relating to the optionee's status under Section 16(a) of the Exchange Act at the time of grant or exercise. This Section 10.1(c) shall constitute an amendment to the BellSouth Corporation Stock Option Plan, and to outstanding non-qualified stock option and tandem stock appreciation right agreements thereunder, to the extent necessary to effect this change to such outstanding stock appreciation rights under such plan. A Prior Plan participant's (or beneficiary's) election to exercise such an outstanding stock appreciation right during any expanded period provided by this Section 10.1(c) shall constitute any required consent by the participant (or beneficiary) to such amendment.

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    10.2 Performance-Based Awards.

    (a) General. Each Agreement for the grant of Performance Shares shall specify the number of Performance Shares subject to such Agreement, the Performance Period and the Performance Objective, and each Agreement for the grant of any other Award that the Administrator determines to make subject to a Performance Objective similarly shall specify the applicable number of Shares, the period for measuring performance and the Performance Objective. Each Agreement for a performance-based grant shall specify in respect of a Performance Objective the minimum level of performance below which no payment will be made, shall describe the method for determining the amount of any payment to be made if performance is at or above the minimum acceptable level but falls short of full achievement of the Performance Objective, and shall specify the maximum percentage payout under the Agreement. Such maximum percentage in no event shall exceed 100% in the case of performance-based Restricted Shares and 200% in the case of Performance Shares or performance-based Dividend Equivalent Rights.

    (b) Performance Objective. The Administrator shall determine and specify the Performance Objective in the Agreement for a Performance Share or for any other performance-based Award, which Performance Objective shall consist of (i) one or more business criteria, including (except as limited under Section 10.2(c) below for Awards to Covered Employees) financial, service level and individual performance criteria, and (ii) a targeted level or levels of performance with respect to such criteria. Performance Objectives may differ between Participants and between types of Awards and from year to year.

    (c) Additional Rules Applicable to Covered Employees. The Performance Objective for Performance Shares and any other performance-based Award granted to a Covered Employee shall be objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of the Code and shall be based on one or more of the following business criterion: (i) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per Share; (v) book value per Share; (vi) return on shareholders' equity; (vii) expense management; (viii) return on investment; (ix) improvements in capital structure; (x) profitability of an identifiable business unit or product; (xi) maintenance or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working capital; (xviii) return on assets; and (xix) total shareholder return. The foregoing criterion may relate to BellSouth, one or more of its Subsidiaries or one or more of its divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Compensation Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code (or any successor section thereto), the performance goals may be calculated without regard to extraordinary items. Achievement of this Performance Objective shall be measured over a period of years not to exceed ten as specified by the Compensation Committee in the Agreement for the performance-based Award. No business criterion other than that named above in this Section 10.2(c) may be used in establishing the performance objective for an Award to a Covered Employee under this Section 10.2. For each such Award relating to a Covered Employee, the Compensation Committee shall establish the targeted level or levels of performance for such business criterion (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of the relevant performance period. The Compensation Committee may, in its discretion, reduce the amount of a payout otherwise to be made in connection with an Award under this Section 10.2(c), but may not exercise discretion to increase such amount, and the Committee may consider other performance criteria in exercising such discretion. All determinations by the Compensation Committee as to the achievement of Performance Objectives under this Section 10.2(c) shall be made in writing. The Compensation Committee may not delegate any responsibility under this Section 10.2(c).

    (d) Intent with regard to Code Section 162(m). It is the intent of BellSouth that, unless otherwise determined by the Compensation Committee, Options, SARs, and Awards subject to Performance Objectives specified under this Section 10.2, granted under the Plan to persons who are Covered Employees, shall constitute "qualified performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder. Accordingly, unless otherwise determined by the Compensation Committee, if any provision of the Plan or any Award agreement relating to such an Award granted to a Covered Employee does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder (including Proposed Regulation 1.162-27 unless and to the extent it is superseded by an interim or final

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regulation), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Compensation Committee or any other person discretion to increase the amount of compensation otherwise payable to a Covered Employee in connection with any such Award upon attainment of the Performance Objectives.

    10.3 Change in Control.

    (a) General. The Compensation Committee shall have the right in its sole discretion to include with respect to any Award granted to a Participant under this Plan provisions accelerating the vesting or Settlement of such Award upon a Change in Control, subject to the restrictions on dispositions of equity securities set forth in Sections 10.1(a) and 12.1 and the restrictions in Section 10.3(d) below. Such acceleration rights may be included as part of the Agreement for such Award or may be included at any time after the Award has been granted to the Participant. Such acceleration rights may include, or be made subject to, such restrictions as the Compensation Committee may deem are appropriate to avoid or ameliorate the federal income tax impact of excess parachute payments as defined in Section 280G(b) of the Code.

    (b) Options and SAR Grants. Any Option or SAR granted under the Plan on and after September 23, 1996 shall become fully vested and exercisable upon a Change in Control. Such Option or SAR following a Change in Control accordingly (i) shall be exercisable without regard to any dates specified in the applicable grant Agreement and (ii) any conditions specified in the grant Agreement or otherwise in the Plan for the forfeiture of the Option or SAR, including any conditions related to termination of employment or noncompetition, shall not apply, subject in both cases to the continued application of the expiration date specified in the grant Agreement on which the Option or SAR will expire in all events.

    (c) Outstanding Non-Qualified Stock Options and SARs. Effective September 23, 1996, Section 10.3(b) also shall apply to all outstanding non-qualified stock options and tandem SARs under this Plan and also those issued under the BellSouth Corporation Stock Option Plan, subject in both cases to the consent of the applicable participant in accordance with rules established by BellSouth. This Section 10.3 (and related definitions) shall constitute an amendment to the BellSouth Corporation Stock Option Plan, and to all outstanding non-qualified stock options and tandem stock appreciation rights under this Plan and under the Prior Plan, to the extent necessary to effect this change to all such outstanding non-qualified stock options and stock appreciation rights.

    (d) Pooling of Interests Accounting Treatment. Notwithstanding anything to the contrary in this Plan, if the application of this Section 10.3 would preclude the use of pooling of interests accounting treatment with respect to a transaction for which such treatment otherwise is available and to be adopted by BellSouth, the provisions of this Section 10.3 shall be modified as it applies to such transaction, to the minimum extent necessary to prevent such impact, including if necessary the invalidation of such provisions to the extent they otherwise would have been triggered by such transaction. If the pooling of interests accounting rules require modification or invalidation of one or more provisions of this Section 10.3 as it applies to such transaction, the adverse impact on the Participant (including for this purpose a Prior Plan participant) shall, to the extent reasonably possible, be proportionate to the adverse impact on other similarly situated Participants of BellSouth. The Board shall, in its sole and absolute discretion, make all determinations necessary under this subsection; provided, that determinations regarding the application of the pooling of interests accounting rules for these purposes shall be made by BellSouth with the concurrence of BellSouth's independent auditors at the time such determination is to be made.

    10.4 Transferability During Lifetime.

    (a) General Rule. During the lifetime of a Participant to whom an Award is granted, only the Participant (or such Participant's legal representative) may exercise or receive payment of an Award. No Award (other than unrestricted Stock Payments upon receipt) may be sold, assigned, transferred (except as provided in the sentence above), exchanged, or otherwise encumbered or made subject to any creditor's process, whether voluntary, involuntary or by operation of law, and any attempt to do so shall be of no effect. This Section 10.4(a) shall apply to all Awards except as provided in Sections 10.4(b) and 10.4(c) below.

    (b) Limited Exception for Certain NQSOs and SARs. Unless the terms of the applicable grant Agreement for an NQSO or SAR specifically provides that this Section 10.4(b) shall not apply, a Participant who is an Officer or a Non-Employee Director (or a retired Officer or Non-Employee Director) may transfer such

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Participant's rights under any NQSO or SAR Agreement (other than a SAR tandem to an ISO) granted on or after November 24, 1996 by properly completing and delivering to the executive compensation group at BellSouth headquarters a Non-Qualified Stock Option Assignment Form and satisfying such other conditions as BellSouth may impose, provided that such transfer is without consideration and to (i) one or more of the Participant's spouse, parents, spouse's parents, siblings, siblings' lineal descendants, children, children's lineal descendants, children's spouses and children's spouses' lineal descendants, including in all cases legally adopted individuals, or (ii) a trust, partnership or similar entity for the benefit solely of one or more of the family members described above. The rights of any such transferee thereafter shall be nontransferable except that such transferee, where applicable under the terms of the transfer by the Participant, shall have the right previously held by the Participant to designate a Beneficiary. A Participant may make such a transfer of the Participant's rights with respect to less than all of the total number of Shares subject to an Option or SAR Agreement provided that each such transfer shall apply to at least 20% of the total number of Shares initially subject to such Agreement. Upon the transfer by a Participant of any rights under an SAR Agreement or under an NQSO Agreement which includes a tandem SAR, any right under the SAR to exercise such SAR for cash automatically is eliminated with respect to such transferred interest. Notwithstanding Section 12.5 or the terms of any Agreement, BellSouth or any Subsidiary shall not withhold any amount attributable to the Participant's tax liability from any payment of cash or Shares to a transferee or transferee's Beneficiary under this Section 10.4(b) upon exercise of a transferred NQSO or SAR by such person, but may require the payment of an amount equal to BellSouth's or any Subsidiary's withholding tax obligation as a condition to such exercise or as a condition to the release of cash or Shares upon such exercise.

    (c) Outstanding Non-Qualified Stock Options and SARs. Effective November 24, 1996, Section 10.4(b) also shall apply to all non-qualified stock options and SARs tandem to non-qualified stock options outstanding under the Plan and also to all outstanding non-qualified stock options and tandem SARs issued under the BellSouth Corporation Stock Option Plan. This Section 10.4 (and related Plan provisions on transferability) shall constitute an amendment to the BellSouth Corporation Stock Option Plan, and to all outstanding non-qualified stock option and tandem stock appreciation right grant agreements under this Plan and the Prior Plan, to the extent necessary to effect this change to such outstanding non-qualified stock options and tandem stock appreciation rights. The election by a Participant or Beneficiary (including for this purpose a participant or beneficiary under the Prior Plan) to transfer any such non-qualified stock option and tandem stock appreciation right pursuant to this Section 10.4(c) shall constitute any required consent by the Participant (or Beneficiary) to such amendment.

    10.5 Transfers to Death Beneficiary. In the event of a Participant's death, all of such person's outstanding Awards, including his or her rights to receive any accrued but unpaid Stock Payments, will transfer to the maximum extent permitted by law to such person's Beneficiary (except to the extent a permitted transfer of a NQSO or SAR previously was made pursuant to Section 10.4). Each Participant may name, from time to time, any beneficiary or beneficiaries (which may be named contingently or successively) as his or her Beneficiary for purposes of this Plan. Each designation shall be on a form prescribed by the Administrator, will be effective only when delivered to BellSouth, and when effective will revoke all prior designations by the Participant. If a Participant dies with no such beneficiary designation in effect, such person's Beneficiary shall be his or her estate and such person's Awards will be transferable by will or pursuant to laws of descent and distribution applicable to such person.

    10.6 Adjustments. In the event that the Administrator shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under this Plan, then the Administrator, in such manner as it may deem equitable, shall adjust any or all of (i) the number and kind of shares which may thereafter be delivered in connection with Awards, (ii) the number and kind of shares that may be delivered or deliverable in respect of outstanding Awards, (iii) the number and kind of shares with respect to which Awards may be granted as set forth in Article III, and (iv) the exercise price, grant price, or purchase price relating to any Award, or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award. Any such adjustment made by the Administrator, including any cancellation of an outstanding Award made as part of such adjustment, will be final and binding. The terms of this Section 10.6 (and related definitions) shall apply to all outstanding grants and awards under the Prior Plans, and

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this Section 10.6 shall constitute an amendment to the terms of the Prior Plans and to the terms of all such outstanding grants and awards.

ARTICLE XI

Amendments and Termination

    The Board shall have the right to amend, modify, suspend or terminate the Plan at any time; provided, that following the approval of the Plan by BellSouth shareholders, this Plan may not be amended without further approval by shareholders, to the extent such approval is required by the Code, the Exchange Act or other applicable law. No enactment, modification, suspension or termination of the Plan shall alter or impair any Awards previously granted under this Plan without the consent of the holder thereof, unless otherwise required by law. It is conclusively presumed for this purpose that any adjustment for changes in capitalization pursuant to Section 10.6 of this Plan does not affect any right of the holder of an Award. Notwithstanding the foregoing, the Board may not amend the terms of any Option to reduce the Option price. Nor may the Board, without approval by shareholders, cancel any Option and grant a new Option with a lower Option price such that the effect would be the same as reducing the Option price.

ARTICLE XII

General Provisions

    12.1 Stock Restrictions. BellSouth shall have the right under this Plan to restrict or otherwise delay the issuance of any Shares purchased or paid under this Plan until the requirements of any applicable laws or regulations and any stock exchange requirements have been in BellSouth's judgment satisfied in full. Furthermore, any Shares which are issued as a result of purchases or payments made under this Plan shall be issued subject to such restrictions and conditions on any resale and any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light of any stock exchange requirements.

    12.2 Term of Service. The granting of an Award to a Participant under this Plan shall not obligate BellSouth to provide that Participant upon the termination of his or her employment or service with any benefit whatsoever except as provided under the terms and conditions of that Award or obligate the Participant to remain an employee or director.

    12.3 No Shareholder Rights. No Award shall confer on any Participant, or anyone claiming on his behalf, any of the rights of a shareholder of BellSouth unless and until Shares are duly issued or transferred on the books of BellSouth in accordance with the terms and conditions of the Award.

    12.4 No Right to Employment/Continued Service or Awards. The granting of an Award under the Plan shall impose no obligation on BellSouth or any Subsidiary to continue the employment or service of a Participant and shall not lessen or affect BellSouth's or Subsidiary's right to terminate the employment or service of such Participant. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Administrator's determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

    12.5 Unfunded Plan. This Plan shall be unfunded and BellSouth shall not be required to segregate any assets that may at any time be represented by Awards under this Plan. Neither BellSouth, its affiliates, the Administrator, nor the Board shall be deemed to be a trustee of any amounts to be paid under this Plan nor shall anything contained in this Plan or any action taken pursuant to its provisions create or be construed to create a fiduciary relationship between any such party and a Participant or anyone claiming on his or her behalf. To the extent a Participant or any other person acquires a right to receive payment pursuant to an Award under this Plan, such right shall be no greater than the right of an unsecured general creditor of BellSouth.

    12.6 Taxes. BellSouth or any Subsidiary shall withhold from any payment of cash or Shares to a Participant or other person under this Plan an amount sufficient to cover any withholding taxes which may become required with respect to such payment or shall take any other action as it deems necessary to satisfy any income or other tax withholding requirements as a result of the grant or exercise of any Award under this Plan. BellSouth or any Subsidiary shall have the right to require the payment of any such taxes and require that any person furnish

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information deemed necessary by BellSouth or any Subsidiary to meet any tax reporting obligation as a condition to exercise or before making any payment pursuant to an Award.

    12.7 Binding Effect. The provisions of this Plan, and any applicable Agreement, election, Beneficiary designation or other related document, shall be binding upon each Participant and any of his Beneficiaries, transferees, heirs, assignees, distributees, executors, administrators, personal representatives or any other person claiming any rights under this Plan. Any such person claiming any rights under this Plan shall be subject to the terms and conditions of this Plan and all such documents and such other terms and conditions, not inconsistent with this Plan, as the Administrator may impose pursuant to Article V.

    12.8 Choice of Law and Venue. This Plan and all related documents shall be governed by, and construed in accordance with, the laws of the State of Georgia, without regard to the conflict of laws provisions thereof (except to the extent provisions of federal law may be applicable). Acceptance of an Award shall be deemed to constitute consent to the jurisdiction and venue of the Superior Court of Fulton County, Georgia and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit, action, or other proceeding relating to such Award, including the enforcement of any rights under this Plan or any Agreement or other document, and shall be deemed to constitute consent to any process or notice of motion in connection with such proceeding being served by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

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QuickLinks

THE AMENDED AND RESTATED BELLSOUTH CORPORATION STOCK PLAN EFFECTIVE APRIL 24, 1995 AS AMENDED
ARTICLE I Purpose
ARTICLE II Definitions
ARTICLE III Shares Subject to Plan
ARTICLE IV Effective Date And Duration
ARTICLE V Administration
ARTICLE VI Options
ARTICLE VII Stock Appreciation Rights
ARTICLE VIII Restricted Shares
ARTICLE IX Other Stock Rights
ARTICLE X Special Provisions Applicable to Awards
ARTICLE XI Amendments and Termination
ARTICLE XII General Provisions

EX-11

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EXHIBIT 11

BellSouth Corporation
Computation of Earnings Per Share

	For the years ended December 31,
	1998		1999		2000
Earnings Per Share—Basic:
Income Before Extraordinary Losses	$	3,527	$	3,448	$	4,220
Extraordinary Loss on Early Extinguishment of Debt, net of tax		—		—		—
Net Income	$	3,527	$	3,448	$	4,220
Weighted average shares outstanding		1,970		1,898		1,876
Earnings Per Common Share Before Extraordinary Losses	$	1.79	$	1.82	$	2.25
Extraordinary Loss on Early Extinguishment of Debt, net of tax		—		—		—
Earnings Per Share	$	1.79	$	1.82	$	2.25
Earnings Per Shares—Diluted:
Income Before Extraordinary Losses	$	3,527	$	3,448	$	4,220
Extraordinary Loss on Early Extinguishment of Debt, net of tax		—		—		—
Net Income	$	3,527	$	3,448	$	4,220
Weighted average shares outstanding		1,970		1,898		1,876
Incremental shares from assumed exercise of stock options and payment of performance share awards		14		18		15
Total Shares		1,984		1,916		1,891
Earnings Per Common Share Before Extraordinary Losses	$	1.78	$	1.80	$	2.23
Extraordinary Loss on Early Extinguishment of Debt, net of tax		—		—		—
Earnings Per Share	$	1.78	$	1.80	$	2.23

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BellSouth Corporation Computation of Earnings Per Share

EX-12

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EXHIBIT 12

BellSouth Corporation
Computation Of Earnings To Fixed Charges
(Dollars In Millions)

			For the years ended December 31,
			1996			1997			1998			1999			2000
1. Earnings
	(a) Income from continuing operations before deductions for taxes and interest		$	5,329		$	6,182		$	6,588		$	6,518		$	7,926
	(b) Portion of rental expense representative of interest factor			90			91			81			99			105
	(c) Equity in losses from less-than-50% owned investments (accounted for under the equity method of accounting)			68			78			97			396			142
	(d) Excess of earnings over distributions of less-than-50%-owned investments (accounted for under the equity method of accounting)			(53	)		(85	)		(46	)		(87	)		(707	)
		TOTAL	$	5,434		$	6,266		$	6,720		$	6,926		$	7,466
2. Fixed Charges
	(a) Interest		$	739		$	783		$	867		$	1,059		$	1,361
	(b) Portion of rental expense representative of interest factor			90			91			81			99			105
		TOTAL	$	829		$	874		$	948		$	1,158		$	1,466
	Ratio (1 divided by 2)			6.55			7.17			7.09			5.98			5.09

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BellSouth Corporation Computation Of Earnings To Fixed Charges (Dollars In Millions)

EX-21

Exhibit 21

BELLSOUTH ORGANIZATION OF COMPANIES

As of December 31, 2000

ATTACHMENT TO 10-K

	Jurisdiction
@Track Communications, Inc.	Unknown
1155 Peachtree Associates	Georgia
AB Cellular Holding, LLC	Delaware
Abiatar S.A.	Uruguay
Abilene SMSA Limited Partnership	Unknown
Acadiana Cellular General Partnership	Delaware
ACCC of Los Angeles, Inc.	California
Access to the Americas, S.A.	Peru
Aeroservicios Los Alpes, C.A.	Venezuela
Aktieselskabet af3.november 1971	Denmark
Alabama Cellular Service, LLC	Georgia
Aliena Participações Ltda.	Brazil
ALLTEL Cellular Associates of South Carolina Limited Partnership	Delaware
Amarillo SMSA Limited Partnership	Unknown
Amcell of Atlantic City, LLC	Unknown
American Cellular Communications LLC	Delaware
American Cellular Network Company, LLC	Unknown
Ameritech Mobile Communications, LLC	Unknown
Ameritech Wireless Communications, LLC	Unknown
Anniston-Westel Company, LLC	Florida
Apenina Participações Ltda.	Brazil
Atlanta-Athens MSA Limited Partnership	Delaware
Aurora/Elgin Cellular Telephone Company, LLC	Unknown
Averdin Holdings Ltda.	Brazil
AWACS Purchasing Company LLC	Unknown
B.A. Celular Inversora S.A.	Argentina
Bakersfield Holdings, LLC	Georgia
Bautzen Inc.	Colombia
BCP S.A.	Brazil
BCP SP Ltd.	Brazil
BCTC of Texas, LLC	California
Beijing Ji Tong—BellSouth Communication & Information Engineering Co., Ltd.	China
Bell IP Holding L.L.C.	Delaware
BellSouth Accounts Receivable Management, Inc.	Delaware
BellSouth Advertising & Publishing Brazil (B.V.I.) Holdings Limited	British Virgin Islands
BellSouth Advertising & Publishing Brazil (B.V.I.) Limited	British Virgin Islands
BellSouth Advertising & Publishing Brazil Holdings, Inc.	Delaware
BellSouth Advertising & Publishing Corporation	Georgia
BellSouth Advertising & Publishing Peru (B.V.I.) Holdings Limited	British Virgin Islands
BellSouth Advertising & Publishing Peru (B.V.I.) Limited	British Virgin Islands
BellSouth Advertising & Publishing Peru Holdings, Inc.	Delaware
BellSouth Advertising & Publishing Peru S.R.L.	Peru
BellSouth Affiliate Services Corporation	Georgia
BellSouth Applied Technologies, Inc.	Georgia
BellSouth Asia/Pacific Enterprises, Inc.	Delaware
BellSouth Belgium B.V.	The Netherlands
BellSouth Belgium Holdings, Inc.	Delaware
BellSouth Billing, Inc.	Georgia
BellSouth Brasil Holdings I Ltda.	Brazil
BellSouth Brasil Holdings II Ltda.	Brazil

BellSouth Brazil, Inc.	Georgia
BellSouth BSE of Virginia, Inc.	Virginia
BellSouth BSE, Inc.	Delaware
BellSouth Business Systems, Inc.	Georgia
BellSouth Capital Funding Corporation	Georgia
BellSouth Carolinas PCS, L.L.C.	Delaware
BellSouth Carrier Professional Services Holdings, Inc.	Delaware
BellSouth Carrier Professional Services, Inc.	Delaware
BellSouth Cellular Corp.	Georgia
BellSouth Cellular National Marketing, LLC	Georgia
BellSouth Cellular Services LLC	Georgia
BellSouth Central America (B.V.I.) Holdings Limited	British Virgin Islands
BellSouth Central America Holdings, Inc.	Delaware
BellSouth Central America Services (B.V.I.) Holdings Limited	British Virgin Islands
BellSouth Chile Holdings, Inc.	Georgia
BellSouth Chile S.A.	Chile
BellSouth Chile, Inc.	Georgia
BellSouth China Holdings, Inc.	Delaware
BellSouth China, Inc.	Delaware
BellSouth Colombia, Inc.	Delaware
BellSouth Communication Systems, LLC	Georgia
BellSouth Comunicaciones S.A.	Chile
BellSouth Corporate Aviation and Travel Services, Inc.	Georgia
BellSouth Corporation	Georgia
BellSouth Credit and Collections Management, Inc.	Georgia
BellSouth Customer Technologies, Inc.	Georgia
BellSouth D. C., Inc.	Georgia
BellSouth Denmark Capital Finance Limited	British Virgin Islands
BellSouth Direct Marketing, Inc.	Georgia
BellSouth EC Holdings, Inc.	Delaware
BellSouth Ecuador Holdings (BVI) I Limited	British Virgin Islands
BellSouth Ecuador Holdings (BVI) II Limited	British Virgin Islands
BellSouth Ecuador Holdings Partnership	Ecuador
BellSouth Ecuador Holdings, Inc.	Delaware
BellSouth El Salvador Holdings, Inc.	Delaware
BellSouth El Salvador Limited	Cayman Islands
BellSouth Enterprises, Inc.	Georgia
BellSouth Entertainment, Inc.	Georgia
BellSouth España, S.A.	Spain
BellSouth Exchange Services, Inc.	Georgia
BellSouth Foundation, Inc.	Georgia
BellSouth Guatemala Limited	British Virgin Islands
BellSouth Guatemala y Compania, S.C.A.	Guatemala
BellSouth Holdings B.V.	The Netherlands
BellSouth Holdings, Inc.	Delaware
BellSouth India, Inc.	Delaware
BellSouth Intellectual Property Corporation	Delaware
BellSouth Intellectual Property Group, Inc.	Georgia
BellSouth Intellectual Property Management Corporation	Georgia
BellSouth Intellectual Property Marketing Corporation	Georgia
BellSouth Interactive Media Services, Inc.	Georgia
BellSouth International (Asia/Pacific), Inc.	Delaware
BellSouth International ACCESS, Inc.	Georgia
BellSouth International Capital Finance Limited	Cayman Islands
BellSouth International Limited	United Kingdom
BellSouth International Network Holdings, Inc.	Delaware
BellSouth International U.K. Trustee Limited	United Kingdom

BellSouth International Wireless Services, Inc.	Delaware
BellSouth International, Inc.	Georgia
BellSouth Inversiones S.A.	Chile
BellSouth Inversora S.A.	Argentina
BellSouth IP Holdings, Inc.	Delaware
BellSouth Israel, Inc.	Georgia
BellSouth Latin American Holdings I, Ltd.	British Virgin Islands
BellSouth Latin American Holdings II, Ltd.	British Virgin Islands
BellSouth Latin American Holdings III, Inc.	Delaware
BellSouth Latin American Holdings III, Ltd.	British Virgin Islands
BellSouth Latin American Holdings IV, Inc.	Delaware
BellSouth Latin American Holdings IV, Ltd.	British Virgin Islands
BellSouth Latin American Holdings V, Inc.	Delaware
BellSouth Latin American Holdings V, Ltd.	British Virgin Islands
BellSouth Latin American Investments I, Ltd.	British Virgin Islands
BellSouth Latin American Investments II, Ltd.	British Virgin Islands
BellSouth Latin American Investments III, Ltd.	British Virgin Islands
BellSouth Latin American Investments IV, Ltd.	British Virgin Islands
BellSouth Latin American Investments V, Ltd.	British Virgin Islands
BellSouth Limited	United Kingdom
BellSouth Long Distance, Inc.	Delaware
BellSouth Marketing Services, Inc.	Georgia
BellSouth Mexico, Inc.	Delaware
BellSouth MNS, Inc.	Delaware
BellSouth Mobile Data, Inc.	Georgia
BellSouth Mobile Systems, Inc.	Delaware
BellSouth Mobilfunk GmbH	Germany
BellSouth Mobility Communications, LLC	Georgia
BellSouth Mobility LLC	Georgia
BellSouth Netherlands B.V.	The Netherlands
BellSouth Netherlands Holdings, Inc.	Delaware
BellSouth New Zealand Holdings Limited	New Zealand
BellSouth New Zealand	New Zealand
BellSouth Nicaragua (BVI) Limited	British Virgin Islands
BellSouth Nicaragua Holdings, Inc.	Delaware
BellSouth Panama Holdings, Inc.	Delaware
BellSouth Panama Limited	Cayman Islands
BellSouth Paraguay (BVI) Limited	British Virgin Islands
BellSouth Paraguay Holdings, Inc.	Delaware
BellSouth Personal Communications, LLC (d/b/a BellSouth Mobility DCS)	Delaware
BellSouth Peru BVI Limited	British Virgin Islands
BellSouth Peru Holdings, Inc.	Delaware
BellSouth Peru S.A.	Peru
BellSouth Products, Inc.	Georgia
BellSouth Properties (U.K.)	United Kingdom
BellSouth Public Communications, Inc.	Georgia
BellSouth Resources, Inc.	Georgia
BellSouth Select, Inc.	Georgia
BellSouth Shanghai Centre, Ltd.	Georgia
BellSouth Solutions Group, Inc.	Georgia
BellSouth Southern Cone, Inc.	Georgia
BellSouth Technology Services, Inc.	Georgia
BellSouth Telecommunications, Inc.	Georgia
BellSouth Value Added Services Holdings, Inc.	Delaware
BellSouth Venezuela (BVI) Limited	British Virgin Islands
BellSouth Venezuela Holdings, Inc.	Delaware
BellSouth Venezuela, S.A.	Venezuela

BellSouth Ventures Corporation		Georgia
BellSouth Volcan Holdings (B.V.I.) Ltd.		British Virgin Islands
BellSouth Volcan Holdings, Inc.		Delaware
BellSouth Volcan-BSC de El Salvador y Compania, Sociedad en
	Comandita de Capital Variable	El Salvador
BellSouth Wireless Cable, Inc.		Delaware
BellSouth Wireless Data Services, LLC		Georgia
BellSouth Wireless, LLC		Georgia
BellSouth Worldwide Holdings B.V.		The Netherlands
BellSouth.net Inc.		Delaware
Berry Network, Inc.		Georgia
Berry-Sprint Publishing, Inc.		Georgia
Billing & Management Systems S.A.		Peru
Binford Investments Ltd.		British Virgin Islands
Bloomington Cellular Telephone Company		Delaware
BLS Denmark Associates		Georgia
BLS Denmark, Inc.		Georgia
Bombshell Comércio e Participaçöes Ltda.		Brazil
Bombshell Holdings (B.V.I.) Ltd.		British Virgin Islands
Brazil Cellular Holdings, L.L.C.		Georgia
BS Telecom S.A.		Brazil
BS Telecomunicaçöes S.A.		Brazil
BSB S.A.		Brazil
BSC Cayman General Partnership		Cayman Islands
BSC de Panama Holdings, S.A.		Panama
BSC de Panama S.A.		Panama
BSC del Peru SRL		Peru
BSC Guatemala, Sociedad Anonima		Guatemala
BSCC Cellular of Indiana, L.P.		Delaware
BSCC Cellular of Texas, L.P.		Texas
BSCC of Houston Holdings, Inc.		Delaware
BSCC of Houston, LLC		Texas
BSCC of Louisiana, LLC		Delaware
BSD Cellular Communications		Israel
BSE NE Ltd.		Brazil
BSE S.A.		Brazil
BSI ACCESS U.K. Limited		United Kingdom
BSI Denmark, Inc.		Georgia
BSI Services Guatemala, LLC		Georgia
B-Side Carriers L.P.		Delaware
BSIT International Communications		Israel
BSL Holdings I Ltda.		Brazil
BSL Holdings II Ltda.		Brazil
BSNZ Wireless Holdings, Inc.		Delaware
Campanile Assurance Line Limited		Vermont
Capco		Cayman Islands
Caprock Cellular Limited Partnership		Unknown
Cayman Cellular Holding Limited		Cayman Islands
Cell South of New Jersey, LLC		Unknown
CellCom Israel, Ltd.		Israel
Cellemetry L.L.C.		Delaware
Cellular Credit Corporation		Delaware
Cellular Mobile Services of Indiana, Inc.		Indiana
Cellular Mobile Systems of Michigan RSA #7 Limited Partnership		Unknown
Cellular Network Partnership, Limited Partnership		Unknown
Cellular One Group		Unknown
Cellular Radio of Chattanooga		Georgia

Cellular Retail Corporation	Unknown
Celular Catarinense S.A.	Brazil
Celumóvil S.A.	Colombia
Centram Communications L.P.	British Virgin Islands
Century Cellunet of Michigan RSA No. 6 Celular Limited Partnership	Unknown
Century Cellunet of North Louisiana Cellular Limited Partnership	Delaware
Century Cellunet of Saginaw MSA Limited Partnership	Unknown
Century Cellunet of Southern Michigan Cellular Limited Partnership	Unknown
Centweight B.V.	The Netherlands
Champaign Celltelco	Unknown
Chattanooga CGSA, LLC	Georgia
Chattanooga MSA Limited Partnership	Delaware
Cincinnati SMSA Limited Partnership	Unknown
Cingular Interactive L.P.	Delaware
Cingular Wireless LLC	Delaware
Cingular Wireless Management Corp.	Delaware
Commerce One, Inc.	Delaware
Comoviles S.A.	Colombia
Compania Celular de Colombia Cocelco S.A.	Colombia
Compania de Radiocomunicaciones Moviles S.A.	Argentina
Compania de Telecomunicaciones Comtal Limitada	Chile
Comtel Comunicaciones Telefonicas, S.A.	Venezuela
Comunicaciones Personales, S.A.	Guatemala
Comunicaciones Trunking S.A.	Colombia
Connector Comércio e Participaçöes Ltda.	Brazil
Controling S.A.	Brazil
Corporación 271191, C.A.	Venezuela
Corporate Media Partners	Delaware
Corpus Christi SMSA Limited Partnership	Unknown
Crown Castle International Corp.	Delaware
CSL Associates	Georgia
CSL Chastain Associates	Georgia
CSL Colonnade Associates	Georgia
CSL Exchange South Associates	Georgia
CSL Twelfth Street Associates	Georgia
CSL Western Way Associates	Georgia
C-SW Cellular Partnership	Unknown
CTP, S.A.	Argentina
Dallas SMSA Limited Partnership	Unknown
Dansk MobilTelefon I/S	Denmark
Dataserv Espana, S.A.	Spain
Decatur Cellular Telephone Company, LLC	Unknown
Decatur RSA Limited Partnership	Delaware
Delaware Valley PCS Communications, LLC	Unknown
Denmark Alliance, Inc.	Delaware
Det Danske Mobiletelefonkompagni	Denmark
Detroit SMSA Limited Partnership	Unknown
Digital Installations, LLC	Georgia
Doric Holdings Limited & Cia., Ltda.	Nicaragua
Doric Holdings Limited	British Virgin Islands
Eastern Missouri Cellular Limited Partnership	Unknown
Empresa Difusora Radio Tele S.A.	Peru
E-Plus 3 G GmbH	Germany
E-Plus 3 G Luxembourg S.a.r.l.	Luxembourg
E-Plus Mobilfunk Geschäftsführung GmbH	Germany
E-Plus Mobilfunk GmbH & Co. KG	Germany
E-Plus Service GmbH	Germany

Florida Cellular Service, LLC	Georgia
Florida RSA #2B (Indian River) Limited Partnership	Delaware
Galveston Cellular Partnership	Texas
Galveston Cellular Telephone Company	Texas
Gary Cellular LLC	Delaware
Gary Cellular Telephone Company	New York
Georgia Cellular Holdings, LLC	Georgia
Georgia Cellular LLC	Georgia
Georgia RSA No. 1 Limited Partnership	Delaware
Georgia RSA No. 2 Limited Partnership	Delaware
Georgia RSA No. 3 Limited Partnership	Delaware
German Mobile Holdings, Inc.	Delaware
German Mobilfunk Investments, Inc.	Delaware
Gfd Gesellschaft für Datanfunk mbH	Germany
Glemond Limited	British Virgin Islands
Global Leasing Company	Georgia
GMI Mobilfunk Beteiligung GmbH	Germany
GN Store Nord Mobil I/S	Denmark
GN Store Nord Mobiltelefon 2 A/S	Denmark
GTE Mobilnet of Austin Limited Partnership	Unknown
GTE Mobilnet of Austin, LLC	Unknown
GTE Mobilnet of Texas RSA #11 Limited Partnership	Unknown
GTE Mobilnet of Texas RSA #16 Limited Partnership	Unknown
Harbinger Corporation	Georgia
Hawaii Cellular Corporation	Hawaii
Houma-Thibodaux Cellular Partnership	Unknown
Houston Cellular Holding Company (Tex), LLC	Texas
Houston Cellular Telephone Company, L.P.	Texas
Huntsville Cellular Telephone LLC	Alabama
Huntsville MSA Limited Partnership	Delaware
Indiana 8, L.L.C.	Delaware
Indiana Cellular LLC	Delaware
Inmuebles Aries S.A.	Peru
Intelleprop, Inc.	Delaware
Intelligent Media Ventures, LLC	Georgia
Intertel S.A.	Chile
Iray B.V.	The Netherlands
Jackson Acquisitions LLC.	Georgia
Jackson Cellular LLC	Georgia
Jackson Holdings, LLC	Georgia
Jacksonville MSA Limited Partnership	Delaware
Joliet Cellular Telephone, LLC	Unknown
Kalamai Holdings & Cia., Ltda.	Nicaragua
Kalamai Holdings Limited	British Virgin Islands
Kankakee Cellular L.L.C.	Unknown
Kansas City SMSA Limited Partnership	Unknown
Kentucky CGSA, LLC	Georgia
Kobrocom Electronica Ltda.	Colombia
Kokomo Celltelco Partnership	Indiana
KPN/BLS Holding GmbH	Germany
L. M. Berry and Company	Georgia
Lafayette MSA Limited Partnership	Delaware
Latin America Mobile Services, Ltd.	British Virgin Islands
Latin American Cellular Services, Inc.	Panama
Lenox Park Holdings, L.L.C.	Georgia
Listel Advertising & Publishing (B.V.I.) Holdings Limited	British Virgin Islands
Listel Advertising & Publishing (B.V.I.) Limited	British Virgin Islands

Listel Advertising & Publishing Holdings, Inc.	Delaware
Listel-Listas Telefônicas S.A.	Brazil
Los Angeles RCCs, LLC	California
Louisiana Cellular Holdings, L.L.C.	Delaware
Louisiana CGSA, LLC	Georgia
Louisiana RSA No. 7 Cellular General Partnership	Delaware
Louisiana RSA No. 8 Limited Partnership	Delaware
Lubbock SMSA Limited Partnership	Unknown
Madison SMSA Limited Partnership	Unknown
Marketing Communications Networks, Inc.	Georgia
McAllen-Edinburg-Mission SMSA Limited Partnership	Unknown
MCTA	Mississippi
Memphis CGSA, LLC	Georgia
Memphis SMSA Limited Partnership	Delaware
Michigan RSA #9 Limited Partnership	Unknown
Midland-Odessa SMSA Limited Partnership	Unknown
Midtjydsk Radiotelefon A/S	Denmark
Milwaukee SMSA Limited Partnership	Unknown
Missouri 1-Atchison RSA Limited Partnership	Unknown
Missouri RSA 11/12 Limited Partnership	Unknown
Missouri RSA 8 Limited Partnership	Unknown
Missouri 9B1 Limited Partnership	Unknown
Mobil Direkt GmbH	Germany
Movicel S.A.	Colombia
Movicom Colombia S.A.	Colombia
Movicom S.A.	Brazil
M-T Cellular, LLC	Tennessee
National Telecommunications Alliance, Inc.	Delaware
New E-mail Communications System Ltd.	Israel
New York Holdings, LLC	Unknown
Norte Brasil Telecom	Brazil
North American GSM Alliance, LLC	Delaware
Northeast Mississippi Cellular, LLC	Georgia
Northeastern Georgia RSA Limited Partnership	Delaware
OESP Mídia Ltda.	Brazil
Oklahoma City SMSA Limited Partnership	Unknown
Oklahoma RSA 3 Limited Partnership	Unknown
Oklahoma RSA 5 Limited Partnership	Unknown
Oklahoma RSA 7 Limited Partnership	Unknown
Oklahoma RSA 9 Limited Partnership	Unknown
Olympic Ltda.	Colombia
Orlando CGSA Holdings, Inc.	Delaware
Orlando CGSA, LLC	Georgia
Orlando SMSA Limited Partnership	Delaware
Otecel S.A.	Ecuador
Pacific Bell Wireless Northwest, LLC	Unknown
Pacific Bell Wireless, LLC	Unknown
Pacific Telesis Mobile Services, LLC	Unknown
Palliss Holdings B.V.	The Netherlands
Paracomunicar S.A.	Colombia
Peck Holdings Corp.	British Virgin Islands
Pine Bluff Cellular, Inc.	Unknown
Pittsburgh SMSA Limited Partnership	Delaware
Polisistemas S.A.	Ecuador
Prime Enterprises II, L.P.	Delaware
PrintSouth, Inc.	Georgia
Promociones 4222, C.A.	Venezuela

QuickSilver Technology Incorporated	Delaware
Qwest Communications International, Inc.	Delaware
R.A. Celular Inversora S.A.	Argentina
RAM Broadcasting Corporation	New York
RAM Communications Group, LLC	New York
RAM/BSE Communications, L.P.	Delaware
Recep Comércio e Participaçöes Ltda.	Brazil
Red de Servicios Sured, T.E.L., C.A.	Venezuela
Redanil S.A.	Uruguay
ROU Celular Inversora S. A.	Panama
San Antonio SMSA Limited Partnership	Unknown
Santabel Comércio e Participaçöes Ltda.	Brazil
Santabel Holdings (B.V.I.) Ltd.	British Virgin Islands
SBC Wireless LLC	Unknown
SBMS Cellular Telecommunications Bloomington, LLC	Unknown
SBMS Cellular Telecommunications Springfield, LLC	Unknown
Servicios Telcel Acarigua, C.A.	Venezuela
Servicios Telcel Barquisimeto, C.A.	Venezuela
Servicios Telcel C.A.	Venezuela
Servicios Telcel Charallave, C.A.	Venezuela
Servicios Telcel Ciudad Ojeda, C.A.	Venezuela
Servicios Telcel Cumana, C.A.	Venezuela
Servicios Telcel Guarenas, C.A.	Venezuela
Servicios Telcel La Guaira, C.A.	Venezuela
Servicios Telcel Los Teques, C.A.	Venezuela
Servicios Telcel Maracaibo, C.A.	Venezuela
Servicios Telcel Maracay, C.A.	Venezuela
Servicios Telcel Margarita, C.A.	Venezuela
Servicios Telcel Maturin, C.A.	Venezuela
Servicios Telcel Merida, C.A.	Venezuela
Servicios Telcel Puerto La Cruz, C.A.	Venezuela
Servicios Telcel Puerto Ordaz, C.A.	Venezuela
Servicios Telcel Punto Fijo, C.A.	Venezuela
Servicios Telcel San Cristobal, C.A.	Venezuela
Servicios Telcel Valencia, C.A.	Venezuela
Servicios Telcel Valera, C.A.	Venezuela
Sistemas Time Trac, C.A.	Venezuela
Skycell Communications Limited	India
SNET Cellular LLC	Unknown
SNET Mobility LLC	Unknown
SONOFON A/S	Denmark
SONOFON GSM Center A/S	Denmark
SONOFON Holdings A/S	Denmark
SONOFON Partners A/S	Denmark
SONOFON Services A/S	Denmark
South #5 Limited Partnership	Unknown
South Carolina Cellular Service, LLC	Georgia
South Florida Television Inc.	Delaware
Southwestern Bell Mobile Systems LLC	Unknown
Southwestern Bell Mobile Systems Long Distance, LLC	Unknown
Southwestern Bell Wireless, LLC	Unknown
Springwich Cellular Limited Partnership	Unknown
St. Joseph SMSA Limited Partnership	Unknown
Stevens Graphics, Inc.	Georgia
Sunlink Corporation	Georgia
SWBW B-Band Development LLC	Unknown
Tardis Communications plc	United Kingdom

TCIL BellSouth Limited	India
TechSouth, Inc.	Georgia
Telcel International Limited.	Cayman Islands
Telcel, C.A.	Venezuela
Tele 2000, S.A.	Peru
Teleacre Celular	Colombia
TeleAggregation Group, Inc.	Nevada
Telebrasília Celular	Brazil
Telecom BBS (B.V.I.) Limited	British Virgin Islands
Telecomunicaciones BBS SRL	Venezuela
Telefonia Celular de Nicaragua, S.A.	Nicaragua
Telefonia Movel do Sul S.A	Brazil
Telegoiás Celular	Brazil
Tele-Man Netherlands B.V.	The Netherlands
Telemat Celular	Brazil
Telems Celular	Brazil
Teleron Celular	Brazil
Tennessee RSA Limited Partnership	Delaware
Texas RSA 1 Limited Partnership	Unknown
Texas RSA 10B1 Limited Partnership	Unknown
Texas RSA 10B3 Limited Partnership	Unknown
Texas RSA 15B2 Limited Partnership	Unknown
Texas RSA 18 Limited Partnership	Unknown
Texas RSA 19 Limited Partnership	Unknown
Texas RSA 20B1 Limited Partnership	Unknown
Texas RSA 20B2 Limited Partnership	Unknown
Texas RSA 3 Limited Partnership	Unknown
Texas RSA 3B2 Limited Partnership	Unknown
Texas RSA 6 Limited Partnership	Unknown
Texas RSA 7B1 Limited Partnership	Unknown
Texas RSA 7B5 Limited Partnership	Unknown
Texas RSA 8 East Limited Partnership	Unknown
Texas RSA 8 South Limited Partnership	Unknown
Texas RSA 8 West Limited Partnership	Unknown
Texas RSA 9B1 Limited Partnership	Unknown
Texas RSA 9B2 Limited Partnership	Unknown
Texas RSA 9B4 Limited Partnership	Unknown
Texas RSA No. 2 Limited Partnership	Unknown
Thumb Cellular Limited Partnership	Unknown
Tocantins Celular	Brazil
Toledo MSA Limited Partnership	Unknown
Topeka SMSA Limited Partnership	Unknown
Transporte Airejety, C.A.	Venezuela
Twiggs County Cellular Partnership	Georgia
U.C.S., Inc.	New York
Vencorp.	Cayman Islands
Vineland Cellular Telephone Company, LLC	Unknown
Waivetel S.A.	Brazil
Washington/Baltimore Celltelco Holdco, LLC	Unknown
Washington/Baltimore Cellular Limited Partnership	Unknown
Westel Richmond, LLC	Virginia
Westel-Indianapolis LLC	Florida
Westel-Los Angeles LLC	Florida
Westel-Milwaukee Company, LLC	Georgia
Wichita SMSA Limited Partnership	Unknown
Wireless Telecommunications Investment Company, LLC	Delaware
Worcester Telephone Company	Unknown
Youngstown-Warren MSA LP	Unknown

EX-24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, each of the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacities in the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand on the date indicated.

/s/ F. DUANE ACKERMAN F. Duane Ackerman Chairman of the Board, President and Chief Executive Officer Director (Principal Executive Officer)	2/26/01 Date
/s/ RONALD M. DYKES Ronald M. Dykes Chief Financial Officer (Principal Financial Officer)	2/28/01 Date
/s/ W. PATRICK SHANNON W. Patrick Shannon Vice President—Finance and Supply Chain Management (Principal Accounting Officer)	2/28/01 Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ REUBEN V. ANDERSON

Reuben V. Anderson
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ JAMES H. BLANCHARD

James H. Blanchard
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ J. HYATT BROWN

J. Hyatt Brown
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ ARMANDO M. CODINA

Armando M. Codina
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for her in her name, place and stead in her capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as she might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the date indicated.

/s/ KATHLEEN F. FELDSTEIN

Kathleen F. Feldstein
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ JAMES P. KELLY

James P. Kelly
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ JOSEPH M. MAGLIOCHETTI

Joseph M. Magliochetti
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ JOHN G. MEDLIN, JR.

John G. Medlin, Jr.
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ LEO F. MULLIN

Leo F. Mullin
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ EUGENE F. MURPHY

Eugene F. Murphy
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for her in her name, place and stead in her capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as she might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the date indicated.

/s/ ROBIN B. SMITH

Robin B. Smith
Director

February 26, 2001
Date

KNOW ALL PERSONS BY THESE PRESENTS:

    WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the "Company"), proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K for the year ended December 31, 2000.

    NOW THEREFORE, the undersigned hereby constitutes and appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon and Carl E. Swearingen, and each of them, as attorneys for him in his name, place and stead in his capacity as a Director of the Company to execute and cause to be filed the said Annual Report and to execute and cause to be filed any amendment or supplement thereto (including any Form 11-K) deemed by them to be necessary or desirable, hereby giving and granting to said attorneys full power and authority (including substitution and revocation) to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully, to all intents and purposes, as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date indicated.

/s/ WILLIAM S. STAVROPOULOS

William S. Stavropoulos
Director

February 26, 2001
Date