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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549




FORM 10-Q
(Mark One)


|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

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
(Exact name of registrant as specified in its charter)


Georgia 58-1533433
(State of Incorporation) (I.R.S. Employer
Identification Number)


1155 Peachtree Street, N. E., 30309-3610
Atlanta, Georgia (Zip Code)
(Address of principal executive offices)


Registrant's telephone number 404-249-2000


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 ___

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No ___

At April 30, 2003, 1,846,844,268 common shares were outstanding.










Table of Contents


Item Page
Part I
1. Financial Statements
Consolidated Statements of Income ......................... 3
Consolidated Balance Sheets ............................... 4
Consolidated Statements of Cash Flows ..................... 5
Consolidated Statements of Shareholders' Equity
And Comprehensive Income ............................... 6
Notes to Consolidated Financial Statements .................. 7

2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................18

3. Qualitative and Quantitative Disclosures about Market Risk....32

4. Controls and Procedures.......................................32

Part II
1. Legal Proceedings ............................................33
6. Exhibits and Reports on Form 8-K .............................33








PART I - FINANCIAL INFORMATION

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



For the Three Months
Ended March 31,
2002 2003

(As
adjusted -
Note D)

Operating Revenues:
Communications group........................... $ 4,645 $ 4,508
Latin America.................................. 656 509
Domestic advertising and publishing............ 216 494
All other...................................... 17 12

Total Operating Revenues................... 5,534 5,523

Operating Expenses:
Cost of services and products (excludes
depreciation and amortization shown
separately below)...................... 1,917 1,933
Selling, general, and administrative expenses . 1,087 1,052
Depreciation and amortization.................. 1,161 1,038
Provisions for restructuring .................. -- 121

Total Operating Expenses................... 4,165 4,144

Operating income................................... 1,369 1,379
Interest expense................................... 304 296
Gain on sale of operations......................... 1,335 --
Net (losses) earnings of equity affiliates......... (235) 174
Foreign currency transaction gains (losses)........ (290) 45
Other income (expense), net........................ 9 87

Income Before Income Taxes and Cumulative Effect of
Changes in Accounting Principle................ 1,884 1,389
Provision for Income Taxes......................... 753 474

Income Before Cumulative Effect of Changes in
Accounting Principle.... 1,131 915
Cumulative Effect of Changes in Accounting
Principle, Net of Tax...... (1,285) 315


Net (Loss) Income......................... $ (154) $ 1,230



Weighted-Average Common Shares Outstanding:
Basic.......................................... 1,879 1,858
Diluted........................................ 1,879 1,860
Dividends Declared Per Common Share................ $ 0.19 $ 0.21

Basic Earnings Per Share:
Income Before Cumulative Effect of Changes in
Accounting Principle $ 0.60 $ 0.49
Cumulative Effect of Accounting Changes........ (0.68) 0.17

Net Income..................................... $ (0.08) $ 0.66

Diluted Earnings Per Share:
Income Before Cumulative Effect of Changes in
Accounting Principle $ 0.60 $ 0.49
Cumulative Effect of Accounting Changes........ (0.68) 0.17

Net Income..................................... $ (0.08) $ 0.66









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






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



December 31, March 31,
2002 2003

(As adjusted - (unaudited)
Note D)

ASSETS
Current Assets:
Cash and cash equivalents.....................$ 2,482 $ 2,442
Accounts receivable, net of
allowance for uncollectibles
of $476 and $465.......................... 4,129 3,102
Material and supplies......................... 313 323
Other current assets.......................... 938 1,213
Total current assets........................ 7,862 7,080

Investments and advances........................... 9,741 9,941
Property, plant and equipment, net................. 23,445 24,340
Deferred charges and other assets.................. 5,726 5,690
Goodwill........................................... 347 344
Intangible assets, net............................. 2,358 2,323

Total assets...............................$ 49,479 $ 49,718

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year.................$ 5,114 $ 4,428
Accounts payable.............................. 1,572 1,458
Other current liabilities..................... 2,897 3,134
Total current liabilities .................. 9,583 9,020

Long-term debt .................................... 12,283 12,216

Noncurrent liabilities:
Deferred income taxes......................... 4,452 4,882
Other noncurrent liabilities.................. 5,255 5,207

Total noncurrent liabilities............... 9,707 10,089


Shareholders' equity:
Common stock, $1 par value (8,650
shares authorized; 1,860 and
1,847 shares outstanding).................. 2,020 2,020
Paid-in capital............................... 7,546 7,562
Retained earnings............................. 14,531 15,342
Accumulated other comprehensive
income (loss).............................. (740) (859)
Shares held in trust and treasury............. (5,372) (5,637)
Guarantee of ESOP debt........................ (79) (35)

Total shareholders' equity.................. 17,906 18,393

Total liabilities and shareholders' equity $ 49,479 $ 49,718











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






BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(Unaudited)



For the Three Months
Ended March 31,

2002 2003

(As adjusted
- Note D)

Cash Flows from Operating Activities:
Net (Loss) Income $ (154) $ 1,230
Adjustments to net (loss) income:
Depreciation and amortization............................ 1,161 1,038
Provision for uncollectibles............................. 159 168
Net losses (earnings) of equity affiliates............... 237 (174)
Minority interests in income (loss) of subsidiaries...... (81) (8)
Deferred income taxes and investment tax credits......... 597 459
Net losses on sale or impairment of equity securities.... 236 --
Pension income........................................... (205) (134)
Pension settlement (gains) losses........................ -- 67
Stock-based compensation expense......................... 41 31
Unbilled receivable adjustment........................... 163 --
Foreign currency transaction (gains) losses.............. 290 (45)
Cumulative effect of changes in accounting principles.... 1,285 (539)
Gain on sale of operations............................... (1,335) --
Net Change in:
Accounts receivable and other current assets............. 191 (121)
Accounts payable and other current liabilities........... (479) (86)
Deferred charges and other assets........................ 21 75
Other liabilities and deferred credits................... (38) (57)
Other reconciling items, net................................. (24) 4

Net cash provided by operating activities 2,065 1,908

Cash Flows from Investing Activities:
Capital expenditures......................................... (1,005) (631)
Investments in and advances to equity affiliates............. (6) --
Proceeds from sale of debt and equity securities............. 1,334 35
Proceeds from repayment of loans and advances................ 426 --
Other investing activities, net.............................. (4) (24)

Net cash provided by (used for) investing activities 745 (620)

Cash Flows from Financing Activities:
Net borrowings (repayments) of short-term debt............... (962) (202)
Proceeds from long-term debt................................. 4 1
Repayments of long-term debt................................. (10) (514)
Dividends paid............................................... (357) (371)
Purchase of treasury shares.................................. -- (255)
Other financing activities, net.............................. (16) 13

Net cash used by financing activities (1,341) (1,328)

Net increase (decrease) in cash and cash equivalents ........ 1,469 (40)
Cash and cash equivalents at beginning of period............. 592 2,482
Cash and cash equivalents at end of period $ 2,061 $ 2,442




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






BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(IN MILLIONS)
(Unaudited)




Number of Shares Amount
------------------ -------------------------------------------------------------------
(a) Accum. (a)
Shares Other Shares
Held in Compre- Held in
Trust hensive Trust Guarantee
Common and Common Paid-in Retained Income and of ESOP
Stock Treasury Stock Capital Earnings (Loss) Treasury Debt Total

Balance at December 31, 2001 (as
previously reported) 2,020 (143) $ 2,020 $ 6,875 $ 15,137 $ (294) $ (4,996) $ (145) $ 18,597



Adjustment for stock-based compensation
- Note D 493 (332) 161
Net Income (154) (154)
Other comprehensive income, net of tax
Foreign currency translation
adjustment (339) (339)
Net unrealized losses on
securities (25) (25)
Net unrealized gains on
derivatives (b) 40 40
Total comprehensive income (478)
Dividends declared (357) (357)
Share issuances for employee benefit
plans 2 (3) (42) 68 23
Stock-based compensation 41 41
ESOP activities and related tax benefit 2 43 45

Balance at March 31, 2002 2,020 (141) $ 2,020 $ 7,406 $ 14,254 $ (618) $ (4,928) $ (102) $ 18,032






Balance at December 31, 2002 (as
previously reported) 2,020 (160) $ 2,020 $ 6,894 $ 14,963 $ (740) $ (5,372) $ (79) $ 17,686


Adjustment for stock-based compensation
- Note D 652 (432) 220
Net Income 1,230 1,230
Other comprehensive income, net of tax
Foreign currency translation
adjustment (126) (126)
Net unrealized losses on securities 10 10
Net unrealized gains on
derivatives (b) (3) (3)
Total comprehensive income 1,111
Dividends declared (390) (390)
Share issuances for employee benefit
plans 2 (15) (29) 57 13
Purchase of treasury stock (15) (322) (322)
Stock-based compensation 31 31
ESOP activities and related tax benefit 44 44

Balance at March 31, 2003 2,020 (173) $ 2,020 $ 7,562 $ 15,342 $ (859) $ (5,637) $ (35) $ 18,393







(a) Trust and treasury shares are not considered to be outstanding for financial
reporting purposes. As of March 31, 2002, there were approximately 36 shares
held in trust and 105 shares held in treasury. As of March 31, 2003, there were
approximately 37 shares held in trust and 136 shares held in treasury.

(b) Net unrealized gains on derivatives include an adjustment for realized gains
of $31 in first quarter 2002. There were no adjustments for realized gains or
losses in first quarter 2003.








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






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


NOTE A - PREPARATION OF INTERIM FINANCIAL STATEMENTS

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

The accompanying unaudited consolidated financial statements have been prepared
based upon Securities and Exchange Commission (SEC) rules that permit reduced
disclosure for interim periods. In our opinion, these statements include all
adjustments necessary for a fair presentation of the results of the interim
periods shown. All adjustments are of a normal recurring nature unless otherwise
disclosed. Revenues, expenses, assets and liabilities can vary during each
quarter of the year. Therefore, the results and trends in these interim
financial statements may not be the same as those for the full year. For a more
complete discussion of our significant accounting policies and other
information, you should read this report in conjunction with the consolidated
financial statements included in our latest annual report on Form 10-K.

Certain amounts within the prior year's information have been reclassified to
conform to the current year's presentation.

NOTE B - EARNINGS PER SHARE

Basic earnings per share is computed on the weighted-average number of common
shares outstanding during each period. 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 weighted-average share amounts (in millions) used in
calculating earnings per share:

For the Three Months
Ended March 31,
2002 2003
---- ----
Basic common shares outstanding .......................... 1,879 1,858
Incremental shares from stock options and benefit plans... -- 2
----- -----
Diluted common shares outstanding ........................ 1,879 1,860
===== =====

The earnings amounts used for per-share calculations are the same for both the
basic and diluted methods. We did not consider the effect of stock options in
the calculation of loss per common share for the three months ended March 31,
2002, as the effect was anti-dilutive. Outstanding options to purchase 105
million shares for the three months ended March 31, 2002 and 83 million shares
for the three months ended March 31, 2003 were not included in the computation
of diluted earnings per share because the exercise price of these options was
greater than the average market price of the common stock or the effect was
anti-dilutive.

NOTE C - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Exit Costs and Disposal Activities

Effective January 1, 2003, we adopted Statement of Financial Accounting
Standards (SFAS) No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" (SFAS No. 146), which addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging
Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)" (EITF 94-3). The principal difference
between SFAS No. 146 and EITF 94-3 relates to SFAS No. 146's requirements for
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Under
EITF 94-3, a liability for an exit cost as generally defined in EITF 94-3 was
recognized at the date of an entity's commitment to an exit plan.

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN
46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to certain entities in which equity investors
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated support from other parties. FIN 46 requires existing
unconsolidated variable interest entities to be consolidated by their primary
beneficiaries if the entities do not effectively disperse risks among parties
involved. All companies with variable interests in variable interest entities
created after January 31, 2003, must apply the provisions of this Interpretation
to those entities immediately. A public company with a variable interest in a
variable interest entity created before February 1, 2003, must apply the
provisions of this Interpretation to that entity no later than the beginning of
the first interim or annual reporting period after June 15, 2003. For variable
interest entities for which an enterprise holds a variable interest






BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE C - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

that it acquired before February 1, 2003, FIN 46 may be applied by restating
previously issued financial statements or prospectively from the date of
adoption. We are currently evaluating the impact of this interpretation but do
not expect adoption to have a material impact on our results of operations,
financial position or cash flows.

Revenue Recognition for Multi-Element Deliverables

In November 2002, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on EITF No. 00-21, Accounting for Revenue Arrangements with Multiple
Element Deliverables. The Issue addresses how to account for arrangements that
may involve the delivery or performance of multiple products, services and/or
rights to use assets. Revenue arrangements with multiple deliverables should be
divided into separate units of accounting if the deliverables in the arrangement
meet certain criteria. Arrangement consideration should be allocated among the
separate units of accounting based on their relative fair values. The Issue also
supersedes certain guidance set forth in Staff Accounting Bulletin No. 101 (SAB
101), Revenue Recognition in Financial Statements. The final consensus is
applicable to agreements entered into in quarters beginning after June 15, 2003,
with early adoption permitted. Additionally, companies are permitted to apply
the consensus guidance to all existing arrangements as a cumulative effect of a
change in accounting principle. We intend to adopt this new pronouncement
effective July 1, 2003. We are currently evaluating the impact of this
interpretation but do not expect adoption to have a material impact on our
results of operations, financial position or cash flows.

NOTE D - CHANGES IN ACCOUNTING PRINCIPLE

Stock Options

Effective January 1, 2003, we adopted the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," for stock-based
employee compensation. Previously, we applied the intrinsic value method
permitted under SFAS No. 123 in accounting for our stock-based compensation
plans. Compensation cost related to stock options was not reflected in
previously reported results, as all options granted had an exercise price equal
to the market value of the underlying stock on the date of grant. We elected to
adopt the fair value recognition method using the retroactive restatement
alternative provided by SFAS No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure." Accordingly, all prior periods presented have been
restated to reflect the compensation cost that would have been recorded had the
fair value expense recognition provisions of SFAS No. 123 been applied.
Stock-based compensation cost related to stock options of $28 ($18 net of tax or
$0.01 per share) for the first quarter 2003 and $38 ($24 net of tax or $0.01 per
share) for the first quarter 2002 is included in our results of operations. The
balances for retained earnings for December 31, 2001 and December 31, 2002 have
been adjusted for the effect (net of income taxes) of applying retroactively the
fair value method of accounting for stock-based compensation.

Asset Retirement Obligations

Effective January 1, 2003, we adopted SFAS No. 143, "Accounting for Asset
Retirement Obligations" (SFAS No. 143). This statement provides the accounting
for the cost of legal obligations associated with the retirement of long-lived
assets. SFAS No. 143 requires that companies recognize the fair value of a
liability for asset retirement obligations in the period in which the
obligations are incurred and capitalize that amount as part of the book value of
the long-lived asset. SFAS No. 143 also precludes companies from accruing
removal costs that exceed gross salvage in their depreciation rates and
accumulated depreciation balances if there is no legal obligation to remove the
long-lived assets. For our outside plant accounts, such as telephone poles and
cable, estimated cost of removal does exceed gross salvage.

Although we have no legal obligation to remove assets, we have historically
included in our group depreciation rates estimated net removal costs associated
with these outside plant assets in which estimated cost of removal exceeds gross
salvage. These costs have been reflected in the calculation of depreciation
expense, which results in greater periodic depreciation expense and the
recognition in accumulated depreciation of future removal costs for existing
assets. When the assets are actually retired and removal costs are expended, the
net removal costs are recorded as a reduction to accumulated depreciation.

In connection with the adoption of this standard, we were required to remove
existing accrued net costs of removal in excess of the related estimated salvage
from our accumulated depreciation for those accounts. The adjustment is
reflected in the income statement as a cumulative effect of accounting change
adjustment and on the balance sheet as an increase to net plant and equipment of
$1,334 and an increase to deferred income taxes of $518. The cumulative effect
of the change increased net income by $816 or $0.44 per share for the first
quarter 2003.






BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)

NOTE D - CHANGES IN ACCOUNTING PRINCIPLE (Continued)

Since we have previously accrued for net cost of removal through our
depreciation rates, depreciation expense for the first quarter 2003 was
approximately $33 lower than it otherwise would have been absent this change in
accounting. We are expensing net cost of removal as incurred beginning January
1, 2003 for the affected plant accounts. Cost of removal expensed in the first
quarter 2003 was approximately $8.

Revenue Recognition for Publishing Revenues

Effective January 1, 2003, we changed our method for recognizing revenues and
expenses related to our directory publishing business from the publication and
delivery method to the deferral method. Under the publication and delivery
method, we recognized 100% of the revenues and direct expenses at the time the
directories were published and delivered to end-users. Under the deferral
method, revenues and direct expenses are recognized ratably over the life of the
related directory, generally 12 months. The change in accounting method is
reflected in the income statement as a cumulative effect of accounting change
adjustment and on the balance sheet as a decrease to accounts receivable of
$845, increase to other current assets of $166, increase to current liabilities
of $129, and a decrease to deferred income taxes of $307. The cumulative effect
of the change resulted in a decrease to net income of $501 or $0.27 per share
for the first quarter 2003.

Pro Forma Impact of Accounting Changes

The following table presents our 2002 results on a basis comparable to the 2003
results, adjusted to reflect the changes in accounting for asset retirement
obligations and revenue recognition for publishing revenues:



For the Three Months Ended March 31,
----------------------------------------------------------------------------
2002 SFAS No. Directory 2002 2003
As Adjusted 143 Publishing Pro Forma
------------------------------------------------------------ ------------


Total Operating Revenue........................... $ 5,534 $ -- $ 127 $ 5,661 $ 5,523

Operating Expenses
Cost of services and products................... 1,917 7 32 1,956 1,933
Selling, general, and administrative expenses... 1,087 -- 20 1,107 1,052
Depreciation and amortization................... 1,161 (33) -- 1,128 1,038
Provision for restructuring..................... -- -- -- -- 121

Total operating expenses...................... 4,165 (26) 52 4,191 4,144
Operating income.................................. 1,369 26 75 1,470 1,379
Non-operating income (expense), net............... 515 -- -- 515 10

Income before income taxes and cumulative effect
of changes in accounting principle.............. 1,884 26 75 1,985 1,389
Provision for income taxes........................ 753 10 29 791 474

Income before cumulative effect of changes in
accounting principle............................ 1,131 16 46 1,194 915
Cumulative effect of changes in accounting
principle, net of tax........................... (1,285) -- -- (1,285) 315

Net Income.................................... $ (154) $ 16 $ 46 $ (91) $ 1,230


Basic earnings per share*:
Income before cumulative effect of changes in
accounting principle.......................... $ 0.60 $ 0.01 $ 0.02 $ 0.64 $ 0.49
Net income ..................................... $ (0.08) $ 0.01 $ 0.02 $ (0.05) $ 0.66
Diluted earnings per share*:
Income before cumulative effect of changes in
accounting principle.......................... $ 0.60 $ 0.01 $ 0.02 $ 0.64 $ 0.49
Net income ..................................... $ (0.08) $ 0.01 $ 0.02 $ (0.05) $ 0.66
*Earnings per share amounts do not sum due to rounding.



NOTE E - INVESTMENTS AND ADVANCES

Brazil

In March 2003, we signed an agreement to sell our entire stake in BSE, a
wireless communications company that operates in six states of Brazil's
Northeastern region, to Telecom Americas, a subsidiary of America Movil. The
transaction is expected to close in the second quarter of 2003 and is subject to
several conditions, including approval by Brazil's


BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE E - INVESTMENTS AND ADVANCES (Continued)

regulatory authorities and BCP's lenders. At the time of closing, we will
recognize cumulative foreign currency translation losses as part of the gain or
loss on sale. The cumulative foreign currency translation loss related to BSE
was $86 at March 31, 2003.

Colombia

In January 2003, we received proceeds of $35 from the exercise of a put in our
$279 loan participation agreement with our Colombian partner. As a result, no
gain or loss was recognized.

Cingular

The following table displays the summary combined financial information of
Cingular, our wireless equity method business in which we own 40%. These amounts
are shown on a 100% basis.

For the Three Months Ended
March 31,
2002 2003
---- ----
Revenues ..................................... $ 3,543 $3,590
======= ======
Operating income .............................. $ 667 $ 716
====== =====
Net income .................................... $ 338 $ 419
===== =====

NOTE F - PURCHASE OF TREASURY SHARES

During first quarter 2003, we purchased 14.8 million shares of our common stock
for an aggregate cost of $322, which included $255 of cash payments and $67 of
purchases that settled in April. In July 2002, we announced our intention to
purchase up to $2 billion of our outstanding common stock through December 31,
2003. As of March 31, 2003, our total purchases since the announcement are 29.6
million shares for an aggregate of $678. There were no treasury purchases in
first quarter 2002.

NOTE G - WORKFORCE REDUCTION AND RESTRUCTURING

Based on ongoing challenges in the telecom industry, continued economic
pressures and the uncertainty resulting from recent Federal Communications
Commission (FCC) regulatory rulings, we initiated a workforce reduction of
approximately 1,100 positions primarily in network operations where the volume
of work has substantially decreased. As a result, we recognized a charge of $54,
or $33 net of tax, during first quarter 2003. The charge, recorded in accordance
with the provisions of SFAS No. 112, "Employers Accounting for Postemployment
Benefits," consisted of cash severance under ongoing separation pay plans.

In addition, lump-sum distributions for the pension plan exceeded the settlement
threshold equal to the sum of the service and interest costs components of net
periodic pension costs. This resulted in the recognition of a settlement loss of
$67, or $41 net of tax.

The following table summarizes activity associated with the workforce reduction
and restructuring liability for the three months ended March 31, 2003:

Type of Cost
----------------------------
Employee Other Exit
Separations Costs Total

Balance at December 31, 2002.... $84 $ 31 $115
Additions....................... 54 -- 54
Deductions...................... (57) (16) (73)
Balance at March 31, 2003....... $81 $15 $96



NOTE H - SEGMENT INFORMATION

We have four reportable operating segments: (1) Communications group; (2)
Domestic wireless; (3) Latin America; and (4) Domestic advertising and
publishing.



BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)

NOTE H - SEGMENT INFORMATION (Continued)

To align with internal reporting, the 2002 segment results for the Domestic
advertising and publishing segment have been recast to reflect the change in
accounting method as discussed in Note D. Prior period results for all segments
have been restated for the effects of adopting the fair value method of
accounting for stock-based compensation.

The following table provides information for each operating segment:

For the Three Months
Ended March 31,
2002 2003

Communications group
External revenues............................$ 4,645 $ 4,508
Intersegment revenues ...................... 37 68

Total segment revenues...................$ 4,682 $ 4,576
Segment operating income ....................$ 1,306 $ 1,250
Segment net income ......................$ 735 $ 709


Domestic wireless
External revenues ...........................$ 1,417 $ 1,436
Intersegment
revenues.................................. -- --

Total segment revenues...................$ 1,417 $ 1,436
Segment operating income ....................$ 266 $ 286
Segment net
income................................ $ 92 $ 101


Latin America
External revenues ...........................$ 656 $ 509
Intersegment revenues ...................... . 3 --

Total segment revenues...................$ 659 $ 509
Segment operating income.....................$ 59 $ 25
Net earnings (losses) of equity affiliates ..$ (6) $ 6
Segment net income.......................$ 3 $ 10


Domestic advertising and publishing
External revenues ...........................$ 506 $ 494
Intersegment revenues ...................... . 4 4

Total segment revenues...................$ 510 $ 498
Segment operating income ....................$ 243 $ 243
Segment net income ......................$ 148 $ 149


RECONCILIATION TO CONSOLIDATED FINANCIAL INFORMATION
For the Three Months
Ended March 31,
2002 2003

Operating revenues
Total reportable segments ...................$ 7,268 $ 7,019
Cingular proportional
consolidation.............................. (1,386) (1,397)
Advertising and publishing accounting
change .......................... (127) --
Unbilled receivable adjustment................ (163) --
Corporate, eliminations and other ............ (58) (99)

Total consolidated ..........................$ 5,534 $ 5,523


Operating income
Total reportable segments ...................$ 1,874 $ 1,804
Cingular proportional consolidation .......... (266) (286)
Advertising and publishing accounting
change........................... (75) --
Unbilled receivable adjustment................ (163) --
Restructuring charge.......................... -- (54)
Pension settlement loss....................... -- (67)
Corporate, eliminations and other ............ (1) (18)

Total consolidated ..........................$ 1,369 $ 1,379



BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)

NOTE H - SEGMENT INFORMATION (Continued)

For the Three Months
Ended March 31,
2002 2003

Net Income
Total reportable segments ...................$ 978 $ 969
Foreign currency transaction gains (losses)... (204) 48
Brazil loan impairments ...................... (263) --
Net gain on sale of operations ............... 857 --
Unbilled receivable adjustment................ (101) --
Net losses on sale or impairment of
securities.................................. (150) --
Cumulative effect of changes in accounting
principle................................... (1,285) 315
Advertising and publishing accounting
change...................................... (46) --
Restructuring charge.......................... -- (33)
Pension settlement loss....................... -- (41)
Corporate, eliminations and other ............ 60 (28)

Total consolidated...........................$ (154) $ 1,230


Reconciling 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.

NOTE I - RELATED PARTY TRANSACTIONS

We have made advances to Cingular that totaled $3,817 at March 31, 2003 and
March 31, 2002. We earned $70 in the first quarter of 2003 and $70 in the first
quarter of 2002 from interest income on this advance. In addition, Cingular owed
us $55 at March 31, 2003, which represents receivables incurred in the ordinary
course of business. We generated revenues of approximately $98 and $78 in first
quarter 2003 and 2002, respectively, from the provision of local interconnect
and long distance services to Cingular and sales agency fees from Cingular.

NOTE J - VENEZUELAN CURRENCY TRANSLATION

In Venezuela, we own a 78.2% interest in Telcel, a wireless communications
company that we consolidate in our financial statements. The functional currency
used for accounting purposes is the Venezuelan Bolivar. The local currency has
significantly devalued against the U.S. Dollar over the past 12 months due
primarily to political and economic turmoil and the government's decision in
February 2002 to let the currency trade freely in the open market ending the
government's prior fixed band exchange policy. During February 2003, the
Venezuelan government announced a new foreign exchange control regime and set a
fixed exchange rate of 1,600 Bolivars to the U.S. Dollar. As of quarter end, the
government has not established procedures for the conversion of Bolivars into
U.S. Dollars for the payment of dividends to foreign investors. Therefore, we
are currently unable to repatriate capital related to this investment.

Due to the currency controls, there is no free market currency exchange rate.
Therefore, in preparing our consolidated financial statements, we used the
exchange rate established by the Venezuelan government of 1,600 Bolivars to the
U.S. Dollar to translate the local currency financial statements into our
reporting currency, the U.S. Dollar. When the Bolivar resumes trading on the
open market, the exchange rate may be different than the rate set by the
government. A 30% increase in the exchange rate (e.g., 2,100 Bolivars to the
U.S. Dollar) would equate to a decrease of approximately $50 in revenues for the
quarter ended March 31, 2003. A similar change would not be material to net
assets as of March 31, 2003.

We have assessed the situation and deemed it to be temporary in nature.
Therefore, we have continued to consolidate the financial statements of this
operation in accordance with SFAS No. 94. In the event the situation is deemed
other than temporary, we would cease to consolidate this operation and reflect
the investment using the cost method of accounting.

NOTE K - CONTINGENCIES

VENEZUELAN PUT-CALL PROVISION

We own approximately 78% of Telcel, our Venezuelan operation. Telcel's other
major shareholder holds an indirect 21% interest in Telcel. Under a Stock
Purchase Agreement, that shareholder has the right to initiate a process that
could require us to purchase (the puts), and we have the right to initiate a
process that could require that shareholder to sell (the calls) to us, the
shareholder's interest in Telcel with notice of the initiation of the process
with respect to approximately half of that shareholder's interest to be given in
2000 and notice with respect to the remaining balance to be given in 2002.



BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE K - CONTINGENCIES (Continued)

If we exercise our call right, we would purchase that shareholder's interest at
between 100% and 120% of its appraised fair value. If we are required to
purchase the interest, we would do so at between 80% and 100% of its appraised
fair value. In 2000, the shareholder initiated a process for appraising the
value of its interest in Telcel, but the process was not completed. The
shareholder also has sent a letter purporting to exercise the balance of the
Buy-back Rights under the Stock Purchase Agreement. We are currently in
arbitration with our partner over alleged breaches by BellSouth and the
shareholder of the Stock Purchase Agreement. At this time we are unable to
predict the outcome of this arbitration and, therefore, cannot determine the
financial implications of this matter.

COLOMBIA PUT-CALL PROVISION

We own approximately 66% of BellSouth Colombia. Our partner holds the remaining
34% interest. We have agreed with our partner to a series of related put and
call agreements whereby we can acquire, or could be compelled by our partner to
acquire, additional shares of the company, up to the partner's entire interest,
at a price approximately equal to appraised fair value. Our partner currently
has the right to put to us approximately one-half of his 34% interest in the
Colombian operations. The put expires in June 2005. The remaining balance can be
put to us beginning in 2006 until 2009. Our first call option for up to a number
of shares currently equal to approximately 10.5% of BellSouth Colombia's
outstanding common stock is first exercisable beginning in December 2003. We
cannot determine who will exercise their rights under the agreement, or the
amount if exercised.

RECIPROCAL COMPENSATION

Following the enactment of the Telecommunications Act of 1996, our telephone
company subsidiary, BellSouth Telecommunications, Inc. (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. These agreements were the subject of litigation
before various regulatory commissions. After an FCC ruling in April 2001
prescribing new rates, BellSouth settled its claims with competitors for traffic
occurring through mid-June 2001, and entered into agreements that contained the
FCC rates for traffic occurring from mid-June 2001 forward. The District of
Columbia Circuit Court of Appeals, in the second quarter of 2002, remanded the
ruling to the FCC to implement a rate methodology consistent with the Court's
opinion. The FCC's previous rules and rates remain in effect while it
reconsiders them. A change in the rules or rates could increase our expenses.

REGULATORY MATTERS

Beginning in 1996, we operated under a price regulation plan approved by the
South Carolina Public Service Commission (PSC) 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.
If the Consumer Advocate prevails, the case could be remanded to the South
Carolina PSC, which could, after considering evidence, order material refunds to
customers in South Carolina. At this time, we are unable to predict the outcome
of this appeal and, therefore, cannot determine the impact, if any, this matter
may have on future earnings.

LEGAL PROCEEDINGS

Employee Related

On April 29, 2002 five African-American employees filed a putative class action
lawsuit, captioned Gladys Jenkins et al. v. BellSouth Corporation, against the
Company in the United States District Court for the Northern District of
Alabama. The complaint alleges that BellSouth discriminated against current and
former African-American employees with respect to compensation and promotions in
violation of Title VII of the Civil Rights Act of 1964 and 42 USC. Section 1981.
Plaintiffs purport to bring the claims on behalf of two classes: a class of all
African-American hourly workers employed by BellSouth at any time since April
29, 1988, and a class of all African-American salaried workers employed by
BellSouth at any time since April 29, 1988 in management positions at or below
Job Grade 59/Level C. The plaintiffs are seeking unspecified amounts of back
pay, benefits, punitive damages and attorneys' fees and costs, as well as
injunctive relief. At this early



BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE K - CONTINGENCIES (Continued)

stage of the litigation, the likely outcome of the case cannot be predicted, nor
can a reasonable estimate of the amount of loss, if any, be made.

Securities

Several individual shareholders have filed substantially identical class action
lawsuits against BellSouth and three of its senior officers, alleging violations
of the federal securities laws. The cases, captioned In re BellSouth Securities
Litigation, are pending in the United States District Court for the Northern
District of Georgia. The plaintiffs allege that during the period January 22,
2001 through July 19, 2002, the Company (1) overstated the unbilled receivables
balance of its advertising and publishing subsidiary; (2) failed to disclose
that a Florida competitive local exchange carrier (CLEC) had stopped paying
money owed to the Company; and (3) understated its exposure to bad debt losses.
The plaintiffs are seeking an unspecified amount of damages, as well as
attorneys' fees and costs. At this early stage of the litigation, the likely
outcome of the case cannot be predicted, nor can a reasonable estimate of loss,
if any, be made.

Three substantially identical class action lawsuits have been filed in the
United States District Court for the Northern District of Georgia against
BellSouth, its directors, three of its senior officers, and other individuals,
alleging violations of the Employee Retirement Income Security Act ("ERISA").
The plaintiffs, who seek to represent a putative class of participants and
beneficiaries of BellSouth's 401(k) plan (the "Plan"), allege that the company
and the individual defendants breached their fiduciary duties in violation of
ERISA, among other things, (1) failing to provide accurate information to the
Plan participants and beneficiaries; (2) failing to ensure that the Plan's
assets were invested properly; (3) failing to monitor the Plan's fiduciaries;
and (4) failing to disregard Plan directives that the defendants knew or should
have known were imprudent. The plaintiffs are seeking an unspecified amount of
damages, injunctive relief, attorneys' fees and costs. Certain factual
allegations underlying these lawsuits are substantially similar to those in the
putative securities class actions captioned In re BellSouth Securities
Litigation, which are described above. At this early stage of the litigation,
the likely outcome of the cases cannot be predicted, nor can a reasonable
estimate of loss, if any, be made.

Antitrust

A number of antitrust class action lawsuits have been filed against BellSouth in
federal district courts in Atlanta, Georgia and Ft. Lauderdale, Florida. The
plaintiffs purport to represent putative classes consisting of all BellSouth
local telephone service subscribers and/or all subscribers of competitive local
exchange carriers in nine southeastern states since 1996. The plaintiffs allege
that BellSouth engaged in unlawful anticompetitive conduct in violation of state
and federal antitrust laws by, among other things, (1) denying competitors
access to certain essential facilities necessary for competitors to provide
local telephone service; (2) using its monopoly power in the wholesale market
for local telephone service as leverage to maintain a monopoly in the retail
market; and (3) failing to provide the same quality of service, access and
billing to competitors that it provides its own retail customers. The plaintiffs
are seeking an unspecified amount of treble damages, injunctive relief, as well
as attorneys' fees and costs. At this early stage of the litigation, the likely
outcome of the case cannot be predicted, nor can a reasonable estimate of loss,
if any, be made.

A consumer class action alleging antitrust violations of Section 1 of the
Sherman Antitrust Act has been filed against BellSouth, Verizon, SBC and Qwest
in Federal Court in the Southern District of New York. The complaint alleges
that defendants conspired to restrain competition by "agreeing not to compete
with one another and otherwise allocating customers and markets to one another."
The plaintiffs are seeking an unspecified amount of treble damages and
injunctive relief, as well as attorneys' fees and expenses. At this early stage
of the litigation, the likely outcome of the case cannot be predicted, nor can a
reasonable estimate of loss, if any, be made.

Other

On January 31, 2003, we filed litigation against Gary Forsee, the Company's then
Vice Chairman - Domestic Operations, in Fulton County Superior Court of Georgia.
The litigation sought to enforce the non-compete and confidentiality provisions
of Mr. Forsee's contract with BellSouth with respect to his proposed employment
by Sprint Corporation. The court found the non-compete provision invalid, but
that issue is currently on appeal. The court ordered arbitration on the
confidentiality provision and granted a temporary restraining order preventing
Mr. Forsee from accepting employment at Sprint until at least March 12, 2003. On
February 7, 2003, we filed suit against Sprint Corporation in the United States
District Court for the Northern District of Georgia alleging, among other
things, tortuous interference with contractual relations, threatened
misappropriation of trade secrets and unfair competition. On March 18, 2003, the
arbitrator issued a ruling on the confidentiality provision that stated that Mr.
Forsee, subject to significant restrictions outlined in the order, was permitted
to accept employment with Sprint. Mr. Forsee resigned from BellSouth effective
March 18, 2003.



BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE K - CONTINGENCIES (Continued)

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 these claims, we believe that any financial
impact would not be material to our results of operations, financial position or
cash flows.

NOTE L - SUBSIDIARY FINANCIAL INFORMATION

We have fully and unconditionally guaranteed all of the outstanding debt
securities of BST, which is a 100% owned subsidiary of BellSouth. In accordance
with SEC rules, BST is no longer subject to the reporting requirements of the
Securities Exchange Act of 1934, and we are providing the following condensed
consolidating financial information.

BST, including its subsidiaries (BellSouth Accounts Receivable Management, Inc.,
BellSouth Billing, Inc., BellSouth Business Systems, Inc., BellSouth Credit and
Collections Management, Inc., BellSouth Entertainment, LLC, BellSouth
Interactive Media Services, LLC, BellSouth Products, Inc., BellSouth Public
Communications, Inc.), 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 headquarter
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.


Prior year periods have been restated to include the effects of the adoption of
the fair value recognition provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," as discussed in Note D.

Condensed Consolidating Statements of Income


For the Three Months Ended March 31, 2002
(As adjusted - Note D)

BST Other Parent Adjustments Total


Total operating revenues ........................ $ 4,522 $ 1,231 $ 611 $ (830) $ 5,534
Total operating expenses ........................ 3,331 1,224 442 (832) 4,165

Operating income ................................ 1,191 7 169 2 1,369

Interest expense ................................ 124 50 203 (73) 304
Other income (expense), net ..................... (1) (372) 1,392 (200) 819

Income before income taxes and cumulative effect
of changes in accounting principle............. 1,066 (415) 1,358 (125) 1,884

Provision (benefit) for income taxes ............ 401 76 376 (100) 753

Income before cumulative effect of changes in
accounting principle........................... 665 (491) 982 (25) 1,131

Cumulative effect of changes in accounting
principle...................................... -- -- (1,285) -- (1,285)

Net income (losses) ............................. $ 665 $ (491) $ (303) $ (25) $ (154)







For the Three Months Ended March 31, 2003

BST Other Parent Adjustments Total


Total operating revenues ........................ $ 4,437 $ 1,346 $ 617 $ (877) $ 5,523
Total operating expenses ........................ 3,418 1,174 400 (848) 4,144

Operating income ................................ 1,019 172 217 (29) 1,379

Interest expense ................................ 117 47 172 (40) 296
Other income (expense), net ..................... 4 287 1,273 (1,258) 306

Income before income taxes and cumulative effect
of changes in accounting principle............. 906 412 1,318 (1,247) 1,389

Provision (benefit) for income taxes ............ 337 117 28 (8) 474

Income before cumulative effect of changes in
accounting principle........................... 569 295 1,290 (1,239) 915

Cumulative effect of changes in accounting
principle...................................... 816 (501) -- -- 315

Net income (losses) ............................. $ 1,385 $ (206) $ 1,290 $ (1,239) $ 1,230








BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)



NOTE L - SUBSIDIARY FINANCIAL INFORMATION (Continued)

Condensed Consolidating Balance Sheets





December 31, 2002 March 31, 2003
(As adjusted - Note D)


BST Other Parent Adjust- Total BST Other Parent Adjust- Total
ments ments

ASSETS
Current assets:
Cash and cash equivalents ..... $ 87 $ 745 $ 1,650 $ -- $ 2,482 $ 105 $ 723 $ 1,614 $ -- $ 2,442
Accounts receivable, net ...... 2,664 1,722 3,067 (3,324) 4,129 2,487 907 3,618 (3,910) 3,102
Other current assets .......... 475 592 235 (51) 1,251 477 739 408 (88) 1,536


Total current assets .......... 3,226 3,059 4,952 (3,375) 7,862 3,069 2,369 5,640 (3,998) 7,080


Investments and advances ...... 308 6,489 6,310 (3,366) 9,741 311 6,685 4,547 (1,602) 9,941
Property, plant and equipment,
net ......................... 21,403 1,754 288 -- 23,445 22,379 1,607 354 -- 24,340
Deferred charges and other
assets ...................... 5,302 234 219 (29) 5,726 5,286 257 168 (21) 5,690
Intangible assets, net ........ 1,224 1,179 302 -- 2,705 1,212 1,157 298 -- 2,667


Total assets ..................$ 31,463 $ 12,715 $ 12,071 $ (6,770) $ 49,479 $32,257 $12,075 $11,007 $ (5,621) $49,718


LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Debt maturing within one year .$ 3,445 $1,044 $ 3,150 $(2,525) $ 5,114 $ 3,686 $ 1,069 $ 3,076 $ (3,403) $ 4,428
Other current liabilities ..... 2,963 1,092 1,201 (787) 4,469 2,840 1,197 992 (437) 4,592


Total current liabilities ..... 6,408 2,136 4,351 (3,312) 9,583 6,526 2,266 4,068 (3,840) 9,020


Long-term debt ................ 5,371 1,368 8,304 (2,760) 12,283 5,360 1,047 6,800 (991) 12,216


Noncurrent liabilities:
Deferred income taxes ......... 3,677 1,409 (648) 14 4,452 4,364 1,187 (652) (17) 4,882
Other noncurrent liabilities .. 3,335 1,063 885 (28) 5,255 3,278 985 963 (19) 5,207


Total noncurrent liabilities .. 7,012 2,472 237 (14) 9,707 7,642 2,172 311 (36) 10,089


Shareholders' equity........... 12,672 6,739 (821) (684) 17,906 12,729 6,590 (172) (754) 18,393


Total liabilities and
shareholders' equity ........ $31,463 $12,715 $12,071 $(6,770) $49,479 $32,257 $12,075 $11,007 $(5,621) $49,718




Condensed Consolidating Cash Flow Statements


For the Three Months Ended March 31, 2002


BST Other Parent Adjustments Total


Cash flows from operating activities .......... $ 1,714 $ 317 $ (54) $ 88 $ 2,065
Cash flows from investing activities .......... (876) (25) 2,382 (736) 745
Cash flows from financing activities .......... (865) (158) (966) 648 (1,341)

Net (decrease) increase in cash ............... $ (27) $ 134 $ 1,362 $ -- $ 1,469







For the Three Months Ended March 31, 2003


BST Other Parent Adjustments Total


Cash flows from operating activities .......... $ 1,640 $ 47 $ (9) $ 230 $ 1,908
Cash flows from investing activities .......... (571) (24) 456 (481) (620)
Cash flows from financing activities .......... (1,051) (45) (483) 251 (1,328)

Net (decrease) increase in cash ............... $ 18 $ (22) $ (36) $ -- $ (40)











BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)


NOTE M - SUBSEQUENT EVENTS

Note Receivable from KPN

In April 2003, we received net proceeds of approximately $1,458 resulting from
an early repayment by KPN of the entire outstanding balance of the loan we had
extended to KPN. The full face value of the loan was repaid, including accrued
interest.

Brazil

In April 2003, BCP and its controlling shareholders, including BellSouth,
negotiated with representatives of BCP's senior secured creditors a settlement
that contemplates the restructuring of BCP's debt and the transfer of the shares
held by the controlling shareholders to such creditors. The settlement is
subject to the approval of the senior secured creditors and to regulatory
approvals. Upon sale or liquidation of our investment, we will recognize
cumulative foreign currency translation losses as part of the gain or loss on
exit. The cumulative foreign currency translation losses related to this
investment were $182 at March 31, 2003.






BELLSOUTH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)

For a more complete understanding of our industry, the drivers of our business
and our current period results, you should read the following Management's
Discussion and Analysis of Financial Condition and Results of Operations in
conjunction with our latest annual report on Form 10-K and our other filings
with the SEC.

- --------------------------------------------------------------------------------
Consolidated Results of Operations
- --------------------------------------------------------------------------------

Key financial and operating data for the three months ended March 31, 2002 and
2003 are as follows. All references to earnings per share are on a diluted
basis. The discussion of consolidated results should be read in conjunction with
the discussion of results by segment directly following this section.

Prior year periods have been restated to include the effects of the adoption of
the fair value recognition provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation."

For the Three Months
Ended March 31, Percent
2002 2003 Change

Results of operations:

Total operating revenues $ 5,534 $ 5,523 -0.2%
Cost of services and products 1,917 1,933 0.8%
Selling, general, and administrative expenses 1,087 1,052 -3.2%
Depreciation and amortization 1,161 1,038 -10.6%
Provision for restructuring and asset impairments -- 121 *

Total operating expenses 4,165 4,144 -0.5%
Operating income 1,369 1,379 0.7%
Interest expense 304 296 -2.6%
Net (losses) earnings of equity affiliates (235) 174 *
Gain on sale of operations 1,335 -- *
Foreign currency transaction gains (losses) (290) 45 *
Other income (expense), net 9 87 *

Income before taxes and cumulative effect of
changes in accounting principle, net of tax 1,884 1,389 -26.3%

Provision for income taxes 753 474 -37.1%

Income before cumulative effect of changes in
accounting principle 1,131 915 -19.1%
Cumulative effect of changes in accounting
principle, net of tax (1,285) 315 *

Net (loss) income $(154) $1,230 *


Earnings per share:
Income before effect of changes in accounting
principle $ 0.60 $ 0.49 -18.3%
Net (loss) income $ (0.08) $ 0.66 *

Cash flow data:

Cash provided by operating activities $ 2,065 $ 1,908 -7.6%
Cash (used for) provided by investing activities $ 745 $ (620) *
Cash used for financing activities $(1,341) $(1,328) 1.0%

Other:

Effective tax rate 40.0% 34.1%

Average short-term debt $4,641 $ 4,719 1.7%
Average long-term debt $14,819 $ 12,232 -17.5%

Total average debt $19,460 $ 16,951 -12.9%


* Not meaningful

Operating Revenues

Operating revenues of $5,523 in first quarter 2003 decreased $11 compared to
first quarter 2002 reflecting:

o A decline in revenues of $137 at the Communications group attributable
to: weak economic conditions and increased competitive activity
including wireless substitution; conversion of retail access lines to
UNE-P, specifically in the residential and small-business markets; and
unfavorable impacts from the movement of wholesale customers from a
resale basis to lower-priced unbundled network elements. These
decreases were partially offset by growth in retail DSL and long
distance revenues.

o A decline in revenues of $147 at the Latin America group. Revenues in
this segment were negatively impacted by the effect of foreign
currency exchange rates as the currencies in Argentina and Venezuela
both experienced significant devaluations against the U.S. Dollar.

o An increase in revenues of $278 at the Domestic advertising and
publishing group, primarily driven by a change in accounting principle
for recognizing revenues (see Note D) and the impact of a $163
reduction in revenues recorded in the first quarter of 2002 related to
the correction of unbilled accounts receivable. Excluding these two
adjustments, revenues for this segment declined $12 primarily as a
result of weak economic conditions.

Operating Expenses

Beginning this reporting period, operating expenses now include separate line
items for costs of services and products and selling, general, and
administrative expenses. Cost of services and products is comprised primarily of
network infrastructure and related support costs associated with the
Communications group and Latin America group and printing and distribution costs
associated with our Domestic advertising and publishing business. This line item
also includes expenses associated with certain aspects of customer service
operations for the Communications group. Selling, general, and administrative
expenses are comprised primarily of selling and marketing expenses,
administrative costs, provisions for uncollectible accounts and costs associated
with customer service and billing.

Cost of services and products

Cost of services and products of $1,933 in first quarter 2003 increased $16 from
first quarter 2002. Expenses in the advertising and publishing business
increased $19 compared to the first quarter 2002 primarily due to the change in
accounting method. On a comparable basis, such costs declined $13.
Communications group costs were up slightly compared to prior year first quarter
as decreases in salary and wages and other labor costs related to workforce
reductions were offset by increases in other retiree benefit costs and increases
reflecting lower pension credits. These increases were partially offset by the
impact of currency devaluations in the Latin America group.

Selling, general, and administrative expenses

Selling, general, and administrative expenses of $1,052 in first quarter 2003
decreased $35 from first quarter 2002. The decline was driven by lower expense
in Latin America of $80, primarily due to the impacts of currency devaluation.
This decline was partially offset by increases of $38 at the Communications
group, primarily driven by advertising, and increases of $20 in the Domestic
advertising and publishing business driven entirely by the change in accounting
method. On a comparable basis, the selling, general and administrative expenses
in the advertising and publishing business remained flat.

Depreciation and amortization

Depreciation and amortization of $1,038 in first quarter 2003 decreased $123
from first quarter 2002 reflecting:

o a decline in the Communications group of $95 compared to the prior year
period. This decline reflects the adoption of SFAS No. 143 and lower
depreciation rates under the group life method precipitated primarily
by the significant reductions in capital expenditures.
o a decrease in the Latin America group of $28 compared to the prior year
period due to the effects of currency devaluations, primarily in
Argentina and Venezuela.

Provision for restructuring

The provision for restructuring recorded in the first quarter 2003 relates to
the following:

o charges of $54 associated with actions taken to reduce our workforce,
consisting of an accrual for cash severance payments.
o pension settlement losses of $67 related to lump-sum payments from the
pension plan associated with prior workforce reductions.

Interest Expense

Interest expense related to interest-bearing debt was down $38 year over year
reflecting debt reductions of $2.5 billion. The remaining year-over-year
increases relate to interest accruals on other liabilities and contingencies.

Net earnings (losses) of equity affiliates

Earnings from our unconsolidated businesses increased $409 in first quarter 2003
compared to first quarter 2002 reflecting the absence of recording losses
related to our investments in Brazil. Losses from our Brazilian wireless
affiliates were lower due to the recognition of other-than-temporary impairments
of $383 in first quarter 2002 and the cessation of the recognition of operating
losses subsequent to the impairment. Equity earnings related to Cingular
increased $16 compared to the prior year period offset by lower earnings of $8
related to our equity investment in Israel.

Gain on sale of operations

The $1,335 gain on sale of operations in the first quarter 2002 relates to the
conversion of our ownership interest in E-Plus and related disposition of shares
in KPN.

Foreign currency transaction gains (losses)

Foreign currency transaction gains (losses) of consolidated subsidiaries, which
relate primarily to U.S. Dollar denominated debt in Latin America, included a
net loss of $290 in the first quarter 2002 and a net gain of $45 in the first
quarter 2003. The majority of the losses in 2002 were driven by the devaluation
of the Argentinean Peso, while the 2003 gain reflects a slight recovery of the
Argentinean Peso, offset to some extent by losses in Colombia.

Other income (expense), net

Other income (expense), net includes interest income, gains (losses) on
disposition of assets, gains (losses) on the sale and impairments of investments
and miscellaneous non-operating income.

The quarter-over-quarter increase of $78 is primarily driven by the recognition
of $230 in losses in the prior year period related to our investment in Qwest.
This increase is offset by a $98 decrease in minority interests related to our
Argentinean operation as the minority partner's equity accounts were exhausted
and a $51 decrease in interest income. Our investment in Qwest was liquidated in
second quarter 2002.

Provision for income taxes

The provision for income taxes decreased $279 compared to the prior year period
while the effective tax rate decreased to 34.1% from 40.0% in first quarter
2002. The recording of a foreign tax valuation allowance, deferring recognition
of the tax benefits generated by losses at our operations in Argentina,
increased the rate in the first quarter 2002. The reversal of deferred tax
valuation allowances on net operating losses in Ecuador and Argentina in the
first quarter of 2003 contributed to the lower effective tax rate. The effective
rate was further reduced by income tax benefits related to the inflation
adjustments deductible for Venezuelan tax purposes.

Cumulative effect of changes in accounting principle

Asset Retirement Obligations

Effective January 1, 2003, we adopted SFAS No. 143, "Accounting for Asset
Retirement Obligations" (SFAS No. 143). In connection with the adoption of this
standard, we recorded the cumulative effect of accounting change that increased
net income by $816. See Note D for further discussion of this change.

Revenue Recognition for Publishing Revenues

Effective January 1, 2003, we changed our method for recognizing revenues and
expenses related to our directory publishing business from the publication and
delivery method to the deferral method. The cumulative effect of the change in
accounting method is reflected in the income statement as a decrease to net
income of $501. See Note D for further discussion of this change.

Goodwill and Other Intangible Assets

On January 1, 2002, we adopted Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). In connection
with the adoption of SFAS No. 142, we recorded an impairment loss in first
quarter 2002 of $1,277, with no income tax benefit. Additionally, Cingular
completed its transitional impairment test resulting in an additional loss to
BellSouth in first quarter 2002 of $8 after taxes.


- --------------------------------------------------------------------------------
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:

o Communications group;
o Domestic wireless;
o Latin America; and
o Domestic advertising and publishing.

We have included the operations of all other businesses falling below the
reporting threshold in the "All other businesses" segment.

Management evaluates the performance of each business unit based on net income,
exclusive of internal charges for use of intellectual property and adjustments
for unusual items that may arise. Unusual 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. In addition, when
changes in our business affect the comparability of current versus historical
results, we will adjust historical operating information to reflect the current
business structure. See Note H for a reconciliation of segment results to the
unaudited consolidated financial information.

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.

Adjustments to Segment Results

To align with internal reporting, the 2002 segment results for the Domestic
advertising and publishing segment have been recast to reflect the change in
accounting method as discussed in Note D. Prior period results for all segments
have been restated for the effects of adopting the fair value method of
accounting for stock-based compensation.

- --------------------------------------------------------------------------------
Communications Group
- --------------------------------------------------------------------------------

The Communications group includes our core domestic businesses including: all
domestic wireline voice, data, broadband, e-commerce, long distance, Internet
services and advanced voice features. The group provides these services to an
array of customers, including residential, business and wholesale.

For the Three Months
Ended March 31, Percent
2002 2003 Change

Segment operating revenues:
Local service $ 2,941 $ 2,912 -1.0%
Network access 1,205 1,096 -9.0%
Long distance 205 264 28.8%
Other 331 304 -8.2%
Total segment operating revenues 4,682 4,576 -2.3%
Segment operating expenses:
Cost of services and products 1,618 1,625 0.4%
Selling, general, and administrative expenses 726 764 5.2%
Depreciation and amortization 1,032 937 -9.2%
Total segment operating expenses 3,376 3,326 -1.5%
Segment operating income 1,306 1,250 -4.3%

Segment net income $ 735 709 -3.5%


Segment net income including unusual items $ 735 $1,451 98.1%








For the Three Months
Ended March 31, Percent
2002 2003 Change

Key Indicators (000s except where noted)

Access lines(1):
Residential retail 16,112 14,981 -7.0%
Residential wholesale 861 1,452 68.6%
Total residential lines 16,973 16,433 -3.2%
Business retail 7,621 7,202 -5.5%
Business wholesale 630 702 11.4%
Total business lines 8,251 7,904 -4.2%
Other 201 174 -13.4%
Total access lines 25,425 24,511 -3.6%

Resale lines 651 380 -41.6%
UNE-P (included in access lines above) 859 1,803 109.9%
UNE-Loop(1) 426 367 -13.8%
Total Resale lines and UNEs 1,936 2,550 31.7%
DSL customers 729 1,122 53.9%
Long distance customers -- 1,930 *
Access minutes of use (millions) 25,583 22,795 -10.9%

Digital and data services revenues $ 1,092 $ 1,090 -0.2%
Capital expenditures $ 922 $ 566 -38.6%


* Not meaningful
(1) Access lines include an adjustment to convert ISDN lines to a switched
access line basis for comparability.

Segment operating revenues

Local Service

Local service revenues decreased $29 in the first quarter 2003. Loss of retail
access lines and competitive pressures on pricing are the primary drivers.

Residential access lines decreased 3.2% from first quarter 2002 and business
access lines decreased 4.2% over the same period. The decline in residential
access lines is being driven by soft economic conditions, technology
substitution from wireless services and increased broadband usage and, to a
lesser extent, facilities-based competition.

Retail residential access lines decreased 7.0% from first quarter 2002 and
retail business access lines decreased 5.5% over the same period. The shift in
mix of access lines from retail to wholesale is being driven primarily by
regulatory pricing of Unbundled Network Element-Platform ("UNE-P"), which allows
our competitors to purchase our services at deep discounts.

During first quarter 2003, we added 231 thousand UNE-P lines, bringing total
lines served via UNE-P to approximately 1.8 million. At March 31, 2003, we
provided 2.6 million wholesale lines to competitors, on both a resale and UNE
basis. As state public service commissions lower UNE-P rates, competitors have
increasingly switched from a resale model to the UNE-P due to the higher
discounts.

Data services revenue was flat compared to the first quarter 2002. Data revenue
growth has slowed compared to historical rates due primarily to weak sales of
wholesale data transport services to other communications providers. Wholesale
data revenues represented about 52% of total data services revenues while retail
services such as DSL, ISDN, Frame Relay, Lightgate, and Smartring accounted for
the remaining 48%. During the quarter, DSL revenues of $157 were up $46 from the
comparable prior year period due to a larger customer base, although average
revenue per user was lower due to promotional activity. As of March 31, 2003, we
had 1.1 million customers, an increase of over 390 thousand customers compared
to the prior year total. Other retail data products, primarily DS1 (dedicated
high capacity lines) lines were lower driven by decreases in demand.

Network Access

Network access revenues decreased $109 in the first quarter 2003 when compared
to the same 2002 period. Switched access revenue declines in first quarter 2003
resulted from a 10.9% decrease in access minutes-of-use volumes and a shift in
the basis of wholesale line sales from resale to UNEs, which do not provide
switched access revenues. These volumes continue to be negatively impacted by
migration of minutes to dedicated digital and data service offerings which are
fixed-charge based rather than usage based, competition from competitive local
exchange carriers whose traffic completely bypasses our network, and the effect
of alternative services such as wireless and internet e-mail. Compared to the
first quarter 2002, revenues from dedicated high-capacity data line offerings
declined approximately $6 due to special access rate reductions effective July
2002.

Long Distance

Long distance revenues increased $59 in the first quarter 2003 compared to first
quarter 2002. The launch of retail interLATA services in nine southeastern
states that we serve contributed a $77 increase in revenues. At March 31, 2003,
we served more than 1.9 million consumer and business long distance customers.
Revenue related to wholesale long distance declined $20 compared to the prior
year, driven by a decline of $36 of sales to second and third tier long distance
carriers due to our decision to eliminate certain products within the wholesale
long distance portfolio. This decline was partially offset by a $16 increase in
revenues from Cingular caused by higher volumes associated with the
proliferation of wireless long distance plans.

Other

Other communications revenue decreased $27 in the first quarter 2003 primarily
due to the continuing phase-out of our payphone business, increased customer
discounts and decreases in other incidental revenues. We plan to complete the
exit of the payphone business by the end of 2003. These declines were partially
offset by increases in wireless interconnection fees driven by higher volumes
and recognition of deferred intercompany publishing fee revenue, which had no
impact on consolidated revenues.

Segment operating expenses

Cost of services and products

Cost of services and products of $1,625 in first quarter 2003 increased $7 from
first quarter 2002. Cost of services remained relatively flat compared to prior
year first quarter as decreases in salary and wages of $80 offset increases due
to increases in other retiree benefit costs and increases reflecting lower
pension credits. Cost of services was also impacted by increases in costs
associated with the long distance launch, service activation expense deferral
adjustments and higher penalties associated with service level commitments.
These increases were substantially offset by decreases in contract services,
information technology project expenses and costs associated with the sale of
wholesale long distance and data networking equipment.

Selling, general, and administrative expenses

Selling, general, and administrative expenses of $764 in first quarter 2003
increased $38 reflecting an increase of $23 related to insurance costs,
processing fees and commissions and $26 increase in advertising expense
associated with advertising of product bundles. The provision for uncollectibles
declined $5 as compared to the prior year driven by higher expense related to
the retail business and lower expense in wholesale. Salary and wages and other
labor costs were down $9 compared to the prior year. This decline was offset by
increases in other retiree benefit costs and increases reflecting lower pension
credits.

Depreciation and amortization

Depreciation and amortization expense decreased $95 during first quarter 2003
compared to first quarter 2002. The primary driver of the year-over-year decline
in depreciation expense relates to lower depreciation rates under the group life
method of depreciation. The lower depreciation rates were precipitated primarily
by the significant reductions in capital expenditures. In addition, depreciation
expense was lower due to the adoption of SFAS No. 143. In connection with the
adoption of this standard, we no longer accrue for net cost of removal in our
depreciation rates causing lower depreciation expense. Amortization expense
increased due to higher levels of capitalized software.

Unusual items excluded from segment net income

Unusual items that were excluded from this segment's net income consisted of the
following: for first quarter 2003, special items of $742 in income for the
cumulative effect of change in accounting principle related to the adoption of
FAS 143 offset by restructuring charges; for first quarter 2002 there were no
special items excluded from this segment's results.







- --------------------------------------------------------------------------------
Domestic Wireless
- --------------------------------------------------------------------------------

We own an approximate 40% economic interest in Cingular, a joint venture with
SBC Communications. Because we exercise significant influence over the financial
and operating policies of Cingular, we use the equity method of accounting for
this investment. Under the equity method of accounting, we record our
proportionate share of Cingular's earnings in our consolidated statements of
income. These earnings are included in the caption "Net earnings (losses) of
equity affiliates." For management purposes, we evaluate our Domestic wireless
segment based on our proportionate share of Cingular's results. Accordingly,
results for our Domestic wireless segment reflect the proportional consolidation
of approximately 40% of Cingular's results.

For the Three Months
Ended March 31, Percent
2002 2003 Change

Segment operating revenues:
Service revenues $ 1,326 $ 1,338 0.9%
Equipment revenues 91 98 7.7%
Total segment operating revenues 1,417 1,436 1.3%
Segment operating expenses:
Cost of services and products 451 468 3.8%
Selling, general, and administrative expenses 520 487 -6.3%
Depreciation and amortization 180 195 8.3%
Total segment operating expenses 1,151 1,150 -0.1%
Segment operating income 266 286 7.5%

Segment net income $ 92 $ 101 9.8%


Segment net income including unusual items $ 84 $ 101 20.2%

Key Indicators:

Cellular/PCS Customers (000s) 8,732 8,846 1.3%
Wireless service average monthly
revenue per customer - Cellular/PCS $ 50.44 $ 50.04 -0.8%


Segment operating revenues

Cingular's cellular/PCS customers increased 1.3% compared to March 31, 2002. Net
cellular/PCS additions in the first quarter 2003 decreased 19% compared to
first quarter 2002. During the three months ended March 31, 2003, Cingular's
postpaid subscriber base decreased while the prepaid and reseller subscriber
bases increased. Negative growth in postpaid subscribers early in the first
quarter of 2003 was offset, to a large degree, by stronger postpaid subscriber
growth in the latter half of the quarter. Prepaid subscriber growth was impacted
positively by the KIC (Keep in Contact) prepaid plan launched in the fourth
quarter of 2002, and the reseller subscriber base increased primarily as a
result of aggressive growth by its primary reseller.

For the three months ended March 31, 2003, the cellular/PCS churn rate was 2.6%
compared with a 2.9% churn rate for the three months ended March 31, 2002.
Although Cingular's gross cellular/PCS additions decreased from the first
quarter of 2002, the reduced churn rate significantly mitigated the impact on
the customer base.

Segment operating revenues grew $19 during first quarter 2003 compared to the
same period in 2002. Service revenues increased $12, primarily as a result of an
approximately 91% increase in data revenues from the first quarter of 2002,
reflective of higher penetration and usage of SMS short messaging data services
with Cingular's cellular/PCS customers as well as revenue increases related to
its Mobitex data network. Other increases were due to higher local service
revenues associated with growth in the customer base. Partially offsetting these
increases were declines in roaming and long distance revenues reflecting the
migration of customers to regional and national rate plans and a reduction in
roaming rates with major roaming partners to support all-inclusive rate plans,
and the formation of a venture to share infrastructure with T-Mobile USA, Inc.,
which reduced roaming charges to both carriers' customers. Average revenue per
user (ARPU) for cellular/PCS customers declined $0.40 to $50.04 from $50.44 in
the quarter ended March 31, 2002. An increase in ARPU related to local service
revenues was offset by reductions in revenues from roaming and long distance,
thereby reducing overall service ARPU when compared to first quarter 2002.

Equipment revenues increased $7 due to higher per unit handset pricing and a
product mix change to higher priced handsets such as GAIT (GSN/ANSI-136
Interoperability Team) phones, offset by fewer gross customer additions quarter
over quarter.

Segment operating expenses

Cost of services and products

Cost of services and products increased $17 during first quarter 2003 compared
to the same 2002 period. Cingular's expense growth was driven by significant
increases in minutes of use on the network, system expansion and increased long
distance costs. Although system costs increased, efficiencies attributable to
digital networks contributed to decreasing per-minute costs. A decline in
equipment costs due to lower gross customer additions was offset to a large
extent by increased per unit handset costs driven by a shift to higher end
handsets such as GAIT phones.

Selling, general, and administrative expenses

Selling, general, and administrative expenses of $487 in first quarter 2003
decreased $33 when compared to first quarter 2002, due to reduced
employee-related costs as a result of the sales operation reorganization in
2002, lower indirect commissions expense as a result of fewer gross additions,
reduced advertising and promotion costs, and lower billing expenses as a result
of billing system conversions and related consolidations.

Depreciation and amortization

Depreciation and amortization increased $15 in first quarter 2003 when compared
to the same 2002 period. The increase in depreciation expense of $20 was
attributable to higher levels of gross property, plant and equipment plus
accelerated depreciation on TDMA assets that began in 2003. Amortization expense
declined $5 during the same period due to certain intangibles becoming fully
amortized subsequent to the first quarter of 2002.

Unusual items excluded from segment net income

Unusual items that were excluded from this segment's net income consisted of the
following: in first quarter 2003 there were no special items excluded from this
segment's results; in first quarter 2002, special items of $(8) related to the
cumulative effect of change in accounting principle for the adoption of FAS 142.

- --------------------------------------------------------------------------------
Latin America
- --------------------------------------------------------------------------------

The Latin America segment is comprised of our investments in wireless businesses
in eleven countries in Latin America. Consolidated operations include our
businesses in Argentina, Chile, Colombia, Ecuador, Nicaragua, Peru and
Venezuela. All other businesses, the most significant being the wireless
operations in Brazil, are accounted for under the equity method, and accordingly
their results are reported as Net earnings (losses) of equity affiliates.

For the Three Months
Ended March 31, Percent
2002 2003 Change

Segment operating revenues:
Service revenues $ 562 $ 432 -23.1%
Equipment and other revenues 94 77 -18.1%
Advertising and publishing revenues 3 -- *
Total segment operating revenues 659 509 -22.8%
Segment operating expenses:
Cost of services and products 266 258 -3.0%
Selling, general, and administrative expenses 216 136 -37.0%
Depreciation and amortization 118 90 -23.7%
Total segment operating expenses 600 484 -19.3%
Segment operating income 59 25 -57.6%
Net losses of equity affiliates (6) 6 *

Segment net income $ 3 $ 10 *


Segment net income (loss) including unusual items $ (1,741) $ 57 *

Key Indicators:

Customers (a) (000s) 7,908 8,544 8.0%
Average monthly revenue per customer (a) $ 23 $ 17 -26.1%

* Not meaningful

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

Segment operating revenues

Although the customer base in Latin America increased 8% over the prior year,
segment operating revenues decreased $150 compared to first quarter 2002. The
decline in revenue is primarily due to the weakening of our Latin American
operations' local currencies against the U.S. Dollar and the resulting effect on
translating those revenues to our reporting currency, the U.S. Dollar. Compared
to first quarter 2002, the most significant currency devaluations occurred in
Argentina and Venezuela as combined revenues for these two countries decreased
$177 compared to the year ago period. Although the value of the Argentinean Peso
recovered slightly against the U.S. Dollar during first quarter 2003, the
average exchange rate for the quarter reflected an almost 53% decline as
compared to the average rate in the same quarter of the prior year. Service
revenues reflect $15 additional revenues recorded in Ecuador in the first
quarter 2003 associated with a settlement reached with another wireless carrier
over disputed interconnect fees. The settlement also resulted in recording $21
in cost of services resulting in a net reduction to operating income of $6.

Equipment and other revenues decreased $17 from first quarter 2002 due primarily
to the impact of the previously discussed currency devaluations.


Segment operating expenses

Cost of services and products

Cost of services and products of $258 in the first quarter decreased $8 compared
to first quarter 2002. Changes in foreign currency exchange rates favorably
affected this change. The favorable currency impact was substantially offset by
increased operating costs supporting an 18% increase in network minutes of use
and by a $30 contingency accrual recorded in the first quarter described in the
following paragraph. Cost of services also includes $21 of additional expense
recorded in Ecuador associated with an interconnect settlement previously
described.

Recent administrative regulations in one of the countries in which we operate,
regarding the inclusion of interconnection income in the taxable revenue base,
contradicted the method of calculation used by our subsidiary in computing and
paying its liability for taxes on telecommunications services. We believe we
have a valid argument under existing law for our method of calculating the tax.
However, because of uncertainty in the outcome of this issue, our subsidiary has
recorded a contingency accrual for prior unpaid taxes based on the new
regulations and it intends to calculate taxes in future periods in conformity
with these regulations until the legal issues are resolved. We plan to defend
our position, in the courts if necessary. We cannot predict how long it will
take to resolve this issue.

Selling, general, and administrative expenses

Selling, general, and administrative expenses of $136 decreased $80 compared to
first quarter 2002. This significant decrease was caused primarily by currency
devaluations as Argentina and Venezuela recorded declines of $27 and $31,
respectively. The first quarter 2003 also reflects a $11 benefit in Ecuador
associated with cumulative future deductions to be used to calculate employee
profit-sharing expense.

Depreciation and amortization

Depreciation and amortization expense decreased $28 when compared to first
quarter 2002. The decline reflects the impact of currency devaluations on the
amortizable basis of tangible and intangible assets.

Net losses of equity affiliates

Net losses from our Latin America equity affiliates improved $12 to $6 in first
quarter 2003, primarily as a result of the cessation of recording losses from
our equity investments in Brazil.

Interest expense and taxes

Interest expense includes an accrual of $12 related to the contingency accrual
described above in cost of services and products. The provision for taxes in the
first quarter of 2003 includes benefits related to the reversals of deferred tax
valuation allowances on net operating losses in Ecuador and Argentina.

Unusual items excluded from segment net income

Unusual items that were excluded from this segment's net income consisted of the
following: in 2003, special items of $47 related to foreign currency transaction
gains offset by restructuring charges; in 2002, special items of $(1,744)
related to impairment losses under SFAS No. 142, foreign currency transaction
losses and Brazil loan impairments.

- --------------------------------------------------------------------------------
Domestic Advertising and Publishing
- --------------------------------------------------------------------------------

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

As discussed more fully in Note D to the interim financial statements, effective
January 1, 2003, we changed our method for recognizing revenues and expenses
related to our directory publishing business. This was treated as a cumulative
effect of accounting change and therefore prior year results were not restated.
However, to align with internal reporting, the 2002 segment results for the
Domestic advertising and publishing have been recast to reflect the change.

For the Three Months
Ended March 31, Percent
2002 2003 Change

Segment operating revenues $ 510 $ 498 -2.4%
Segment operating expenses:
Cost of services and products 91 78 -14.3%
Selling, general, and administrative expenses 170 170 0.0%
Depreciation and amortization 6 7 16.7%
Total segment operating expenses 267 255 -4.5%
Segment operating income 243 243 0.0%

Segment net income $ 148 $ 149 0.7%


Segment net income (loss) including unusual items $ 47 $ (355) *

* Not meaningful

Segment operating revenues

Segment operating revenues decreased $12 compared to the first quarter 2002. The
overall industry environment reflects weak economic conditions, which resulted
in a $15 reduction in publishing revenues. The decline was partially offset by
increases in revenues from electronic media offerings.

Segment operating expenses

Cost of services and products of $78 decreased $13 compared to the prior year
period due primarily to lower printing costs.

Selling, general, and administrative expenses of $170 were flat compared to the
corresponding period in 2002. The provision for uncollectible expense increased
$18, primarily due to weak economic conditions and increased bankruptcies of our
advertisers. Lower administrative expenses resulting from cost control measures
offset the increase.

Depreciation and amortization was relatively flat in both quarters.

Unusual items excluded from segment net income

Unusual items that were excluded from this segment's net income consisted of the
following: in 2003, total special items of $(504) included the cumulative effect
of change in accounting principle and restructuring charges; and in 2002,
special items of $(101) related to an unbilled receivable adjustment.


- --------------------------------------------------------------------------------
All Other Businesses
- --------------------------------------------------------------------------------

All other businesses primarily consist of a captive insurance subsidiary and
equity investments in wireless operations in Israel and Denmark and our former
operations in Germany.

For the Three Months
Ended March 31, Percent
2002 2003 Change

Segment operating revenues $ 25 $ 27 8.0%
Segment operating expenses 16 16 --
Segment operating income 9 11 22.2%
Net earnings of equity affiliates 13 9 -30.8%

Segment net income $ 19 $ 17 -10.5%


Segment net income including unusual items $ 876 $ 17 *

* Not meaningful

Segment operating results


Revenues and expenses were derived primarily from the sale of insurance on
customer premises equipment and amortization of deferred revenues related to a
transaction with Crown Castle to monetize wireless towers in 1999. While
revenues increased slightly, operating expenses remained flat, resulting in an
improved segment operating income.

Net earnings of equity affiliates decreased $4, attributable to lower income
from the operations in both Denmark and Israel, offset by the cessation of
recording losses related to our former German operation subsequent to its sale
during the first quarter of 2002.

Unusual items excluded from segment net income

Unusual items that were excluded from this segment's results consisted of the
following: in 2003, there were no special items excluded from this segment's
results; in first quarter 2002, special items of $857 related to a gain on the
conversion of E-Plus, a loss on the sale of KPN stock, and a gain on the
settlement of forward contracts associated with advances to E-Plus.


- --------------------------------------------------------------------------------
Liquidity and Financial Condition
- --------------------------------------------------------------------------------


Net cash provided by (used for):
For the Three Months
Ended March 31,
2002 2003 Change

Operating activities $ 2,065 $ 1,908 (157) 7.6%
Investing activities $ 745 $ (620) (1,365) *
Financing activities $ (1,341) $ (1,328) 13 *

* Not meaningful

Net cash provided by operating activities

Cash generated by operations decreased $157 during first quarter 2003 compared
to the prior year. The decrease was driven primarily by working capital changes
and to a lesser extent by lower cash margins in the Communications group.

Net cash used for investing activities

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
incidental costs of preparing the asset for its intended use, and (b) gross
additions to capitalized software. Our capital expenditures during first quarter
2003 of $631 were incurred to support our wireline and wireless networks, to
promote the introduction of new products and services and to increase operating
efficiency and productivity. The decline in capital expenditures compared to the
prior period relates primarily to targeted capital management and lower demand
levels.

Other investing activities

In first quarter 2003, we received proceeds of $35 from the exercise of a put in
a loan agreement with our Colombian partner. In addition, subsequent to the end
of the quarter, we received $1,458 in proceeds resulting from an early repayment
by KPN of the entire outstanding balance of the loan we had extended to them.

Net cash used for financing activities

During first quarter 2003 we utilized cash from operations to reduce long-term
borrowings by $514 and short-term borrowings by $202. First quarter 2002
included substantial reductions in commercial paper. During the first quarter of
2003, we paid dividends of 20 cents per share totaling $371. In February 2003,
we announced a 5% increase in our dividend bringing the quarterly dividend to 21
cents per share. In addition, during first quarter 2003, we purchased 14.8
million shares of our common stock for an aggregate of $322, which included $255
of cash payments and $67 of purchases that settled in April. Our debt to total
capitalization ratio of 47.4% at March 31, 2003 decreased from 49.2% at December
31, 2002.

Anticipated sources and uses of funds

Cash flows from operations are our primary source of cash for funding existing
operations, capital expenditures, debt interest and principal payments, and
dividend payments to shareholders. Should the need arise, however, we believe we
are well positioned to raise capital in the public debt markets. At March 31,
2003, our corporate debt rating was Aa3 from Moody's Investor Service and A+
from Standard and Poor's. On April 11, 2003, Moody's Investor Service cut our
debt rating from Aa3 to A1. Our short-term credit rating at March 31, 2003 was
P-1 from Moody's and A-1 from Standard and Poor's. Our authorized commercial
paper program as of March 31, 2003 was $8.0 billion, with $1.7 billion
outstanding. We believe that we have ready access to the commercial paper market
in the event funding in excess of our operating cash flows is needed. Subsequent
to March 31, 2003, we reduced our outstanding commercial paper to $1.5 billion
and closed a syndicated line of credit in the amount of $1.5 billion in case we
are unable to access the commercial paper market. The line of credit contains no
significant financial covenants or requirements for compensating balances. We do
not have any balances outstanding under the line of credit. We also have a
registration statement on file with the SEC under which $2.3 billion of
long-term debt securities could be issued. 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
at least the next twelve months.

The majority of our operating cash flow is generated by our Communications group
and Domestic advertising and publishing segments. These segments generate
sufficient cash flow to both cover their operating, investing and financing
needs and provide excess cash to the corporate parent for corporate uses. The
Latin America group is expected to generate sufficient cash to meet its
operating needs. The Domestic Wireless segment, which consists entirely of our
equity investment in Cingular, does not rely on BellSouth for funding; Cingular
generates sufficient cash flow to meet its operating, investing and financing
needs through its own operations or through its own financing activities.

Venezuelan Put-Call Provision

We own approximately 78% of Telcel, our Venezuelan operation. Telcel's other
major shareholder holds an indirect 21% interest in Telcel. Under a Stock
Purchase Agreement, that shareholder has the right to initiate a process that
could require us to purchase (the puts), and we have the right to initiate a
process that could require that shareholder to sell (the calls) to us, the
shareholder's interest in Telcel with notice of the initiation of the process
with respect to approximately half of that shareholder's interest to be given in
2000 and notice with respect to the remaining balance to be given in 2002. If we
exercise our call right, we would purchase that shareholder's interest at
between 100% and 120% of its appraised fair value. If we are required to
purchase the interest, we would do so at between 80% and 100% of its appraised
fair value. In 2000, the shareholder initiated a process for appraising the
value of its interest in Telcel, but the process was not completed. The
shareholder also has sent a letter purporting to exercise the balance of the
Buy-back Rights under the Stock Purchase Agreement. We are currently in
arbitration with our partner over alleged breaches by BellSouth and the
shareholder of the Stock Purchase Agreement. At this time we are unable to
predict the outcome of this arbitration and, therefore, cannot determine the
financial implications of this matter.

Colombia Put-Call Provision

We own approximately 66% of BellSouth Colombia. Our partner holds the remaining
34% interest. We have agreed with our partner to a series of related put and
call agreements whereby we can acquire, or could be compelled by our partner to
acquire, additional shares of the company, up to the partner's entire interest,
at a price approximately equal to appraised fair value. Our partner currently
has the right to put to us approximately one-half of his 34% interest in the
Colombian operations. The put expires in June 2005. The remaining balance can be
put to us beginning in 2006 until 2009. Our first call option for up to a number
of shares currently equal to approximately 10.5% of BellSouth Colombia's
outstanding common stock is first exercisable beginning in December 2003. We
cannot determine who will exercise their rights under the agreement, or the
amount if exercised.

- --------------------------------------------------------------------------------
Market Risk
- --------------------------------------------------------------------------------

For a complete discussion of our market risks, you should refer to the caption
"Quantitative and Qualitative Disclosure About Market Risk" in our 2002 annual
report on Form 10-K. Our primary exposure to market risks relates to unfavorable
movements in interest rates and foreign currency exchange rates. We do not
anticipate any significant changes in our objectives and strategies with respect
to managing such exposures.

- --------------------------------------------------------------------------------
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
- --------------------------------------------------------------------------------

Other than reductions in debt maturing within one year associated with debt
retirements, there are no material changes with respect to off-balance sheet
arrangements and aggregate contractual obligations as presented in our 2002 Form
10-K.

FIN 45 - Guarantees

We have guaranteed approximately $30 of the long-term debt of our Guatemalan
entity. We own 60% of that company and we account for it using the equity
method. In most of our sale and divestiture transactions we indemnify the
purchaser for various items including labor and general litigation as well as
certain tax matters. The nature and terms of these types of indemnities vary by
transaction. Generally, the terms last three to five years for general and
specific indemnities and for the statutory review periods for tax matters. The
events or circumstances that would require us to perform under the indemnity are
transaction and circumstance specific. Historically, we have not incurred
significant costs related to performance under these types of indemnities. At
March 31, 2003, we estimate the aggregate maximum amount of potential payments
under these types of indemnities to be approximately $300.

Sales and other transaction taxes generally are required to be collected by the
vendor from the purchaser and remitted to the appropriate taxing authority. In
some instances, however, it is not clear whether the tax applies to a particular
transaction. When, as a purchaser, BellSouth wants to take the position that a
tax does not apply to a given transaction, it will request that the vendor not
bill the tax to BellSouth. As a condition of not billing the tax, vendors
sometimes request, and BellSouth generally agrees, to indemnify and hold the
vendor harmless in the event that the taxing authority asserts a claim against
the vendor for the tax. We believe any amounts subject to these types of
indemnification would not have a material impact on our results of operations,
financial position or cash flows.


- --------------------------------------------------------------------------------
Operating Environment and Trends of the Business
- --------------------------------------------------------------------------------

Domestic Economic Trends

On average, the economy of the nine-state region tends to closely track the U.S.
economy. Economic activity during the first quarter of 2003 remained sluggish,
hampered by geopolitical concerns. The pace of economic growth is expected to
improve as 2003 unfolds. Real gross domestic product is projected to grow at an
average annual rate of 2.5 percent, slightly better than 2002's growth.

Real personal income growth in our region, estimated at 2.5 percent in 2002, is
expected to reach 3.0 percent in 2003. Employment in the region, which has
historically been closely correlated with various measures of BellSouth's
business performance, is projected to rise 1.2 percent in 2003 after falling an
estimated 0.3 percent in 2002. With 492,000 housing starts in the region in
2002, residential construction activity was at its strongest level since
1985-1986. Although it is unlikely to maintain that pace, residential
construction in the region was still strong in the first quarter and 483,000
starts are projected for 2003. Historically, our business has generally followed
the timing of the cycle in the overall economy, so we expect to see signs of
recovery in our operations as the pace of economic activity improves during
2003.

Domestic Telecommunications Industry Trends

The domestic telecommunications industry continues to be negatively affected by
the combination of excess capacity, reduced capital spending, technology
migration and diminished investor confidence. These issues translate to reduced
revenues and earnings and widespread layoffs and bankruptcies. The convergence
of these factors has the potential to adversely affect the overall economy's
growth and productivity in both the short and long-term.

Specifically, the regional Bell operating companies continue to be adversely
affected by economic weakness, technology substitution, competition and
regulatory burdens. In addition, smaller telecommunications competitors continue
to declare bankruptcy at alarming rates, raising questions about the ability of
the newly bankrupt companies to pay their obligations and their business models
if they re-emerge from bankruptcy with significantly less leverage. Technology
substitution from wireless services, DSL and cable telephony is expected to
continue for the foreseeable future. Further, CLECs continue to use UNE-P as an
alternative to facilities deployment, significantly reducing their costs. The
widespread use of UNE-P enables competitive local exchange carriers to offer
lower priced services, enabling them to gain market share. Meanwhile, the
obligation to provide competitors with access to facilities under UNE-P
significantly reduces the revenue and margins of the regional Bell operating
companies. The FCC is considering the effects of UNE-P pricing and availability
in the triennial review of its policies on unbundled network elements. The FCC
announced decisions in that proceeding on February 20, 2003, but has not yet
issued the required order and rules that provide the legal content of the
decisions. We believe the ability to offer long distance services gives us
product parity to influence customer retention and reacquisition but will do
little to offset the reduced margin effects of current UNE-P pricing.

Over the next 12 to 24 months, we expect to see continued growth in our DSL
subscribers and a significant increase in our long-distance subscriber base.

In the domestic wireless area, increasing competition, market saturation and a
weak economy will likely cause continued pricing pressures and the increase in
subscribers to continue at a moderate level in comparison to historical growth
rates.

Other Matters in the Domestic Business

We have contractual arrangements with WorldCom, Inc. and/or its subsidiaries
related to interconnection of our networks, provision of telecommunication
services and purchase of WorldCom's accounts receivables in connection with a
billing and collection agreement. Monthly billings to WorldCom are approximately
$65 while monthly payables under the billing and collection agreement are
approximately $45. On July 21, 2002, WorldCom and certain of its subsidiary
corporations filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code. A plan of reorganization was filed in April 2003. The
Bankruptcy Code entitles a debtor to accept or reject "executory" contracts,
that is contracts where some future act remains to be done, as in the case of
many of our arrangements with WorldCom. A party to a rejected contract may be
entitled to damages from the debtor for breach of contract. However, such a
claim would likely be an unsecured claim. No assurance can be given that
WorldCom will pay us on a timely basis, or whether WorldCom will accept, reject
or request to renegotiate our existing contracts, or whether we will be
successful in asserting any rights of set-off against amounts due to us from
WorldCom. Should WorldCom reject certain of our contracts, the impact could be
material to operating results if we are unable to substitute the revenue stream
with another customer and utilize the underlying assets.

Latin America Economic Trends

Latin American economies were generally very weak entering 2003. Venezuela's
economy has contracted sharply as a result of currency devaluation and a general
strike. Low business confidence amid political uncertainty will likely keep that
economy in a deep recession in 2003. A slow recovery appears to be underway in
Argentina following four years of recession. Real gross domestic product growth
in Colombia, which was below 2 percent in 2002, is likely to remain sluggish in
2003.

We are restricting new investment in the region and have expectations that the
Latin America group can fund its financial needs from the group's operating cash
flows. In addition, we do not expect to enter into additional, or increase
existing, debt guarantees.

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 hold U.S. Dollar-denominated short
and long-term debt. The currencies of many Latin America 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 local currency-denominated revenues and expenses in U.S. Dollar terms
to decrease and U.S. Dollar-denominated assets and liabilities to increase in
local currency terms. 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 quantify the anticipated effect
of exchange rate fluctuations on our business.

Economic, social and political conditions in Latin America are, in some
countries, unfavorable and volatile, which have adversely affected our
operations. These conditions are making it difficult for us to continue
development of our business, generate revenues or achieve or sustain
profitability in some countries, and could have this effect throughout the
region. Historically, recessions and volatility have been primarily caused by:
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. Our Latin America
business has been materially adversely affected by the recent political and
economic crises in Argentina, Brazil and Venezuela. Other operations in the
region could be materially adversely affected if these crises spread to other
Latin America countries.

Most or all of these factors have occurred at various times in the last two
decades in our core Latin America 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 limit
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. While complete assurance cannot be given as to the outcome
of these matters, we believe that any financial impact would not be material,
individually or in the aggregate, to our results of operations, financial
position or cash flows. See Note K to our consolidated interim financial
statements.

Recently Issued Accounting Pronouncements

See Note C to our consolidated interim financial statements.


Item 3. Qualitative and Quantitative Disclosures About Market Risk

See the caption labeled "Market Risk" in Management's Discussion and Analysis of
Financial Condition and Results of Operations.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to the management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applied its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control objectives. We
also have investments in certain unconsolidated entities. As we do not control
or manage these entities, the disclosure controls and procedures with respect to
such entities are necessarily more limited than those we maintain with respect
to our consolidated subsidiaries.

Within 90 days prior to the date of filing of this report, we carried out an
evaluation, under the supervision and with the participation of management,
including the Chief Executive Officer along with the Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing, the
Chief Executive Officer along with the Chief Financial Officer concluded that
our disclosure controls and procedures are effective, in all material respects,
in timely alerting them to material information relating to BellSouth (including
consolidated subsidiaries) required to be included in our Exchange Act reports.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out the evaluation.

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, in addition to those
contained throughout this document, 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:

o a change in economic conditions in domestic or international markets
where we operate or have material investments which could affect demand
for our services;
o changes in U.S. or foreign laws or regulations, or in their
interpretations, 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;
o continued pressure on the telecommunications industry from a financial,
competitive and regulatory perspective;
o a continued decrease in the growth rate of demand for, and the success
of our efforts to market, our services;
o the intensity of competitive activity and its resulting impact on
pricing strategies and new product offerings;
o changes in the federal and state regulations governing the terms on
which we offer wholesale services to our competitors;
o our ability to successfully penetrate the interLATA long distance
market;
o significant deterioration in foreign currencies relative to the U.S.
Dollar in foreign countries in which we operate, particularly in Latin
America;
o the unwillingness or inability of our partners to fund their
obligations to our international joint ventures due to deteriorating
economic conditions or other factors;
o the unwillingness of banks or other lenders to lend to our
international joint ventures due to deteriorating economic conditions
and tightening credit standards or to restructure existing debt,
particularly in Latin America;
o higher than anticipated start-up costs or significant up-front
investments associated with new business initiatives;
o the outcome of pending litigation;
o unanticipated higher capital spending from, or delays in, the
deployment of new technologies;
o the impact of terrorist attacks on our business; and
o the impact and the success of the wireless joint venture with SBC
Communications, known as Cingular Wireless, including marketing and
product development efforts, technological change and financial
capacity.

PART II -- OTHER INFORMATION


Item 1. Legal Proceedings

On January 31, 2003, we filed litigation against Gary Forsee, the Company's then
Vice Chairman - Domestic Operations, in Fulton County Superior Court of Georgia.
The litigation sought to enforce the non-compete and confidentiality provisions
of Mr. Forsee's contract with BellSouth with respect to his proposed employment
by Sprint Corporation. The court found the non-compete provision invalid, but
that issue is currently on appeal. The court ordered arbitration on the
confidentiality provision and granted a temporary restraining order preventing
Mr. Forsee from accepting employment at Sprint until at least March 12, 2003. On
February 7, 2003, we filed suit against Sprint Corporation in the United States
District Court for the Northern District of Georgia alleging, among other
things, tortuous interference with contractual relations, threatened
misappropriation of trade secrets and unfair competition. On March 18, 2003, the
arbitrator issued a ruling on the confidentiality provision that stated that Mr.
Forsee, subject to significant restrictions outlined in the order, was permitted
to accept employment with Sprint. Mr. Forsee resigned from BellSouth effective
March 18, 2003.




Item 6. Exhibits and Reports on Form 8-K


(a) Exhibits:

Exhibit
Number
- -------------------
- -------------------

4a No instrument which defines the rights of holders of our
long- and intermediate-term debt is filed herewith pursuant
to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this
regulation, we agree to furnish a copy of any such
instrument to the SEC upon request.
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
99-a Statement Required by 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99-b PricewaterhouseCoopers LLP preferability letter regarding
accounting change.

(b) Reports on Form 8-K:

Date of Event Subject

NONE






SIGNATURE


Pursuant to the requirements 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

By /s/ W. Patrick Shannon
----------------------
W. PATRICK SHANNON
Vice President - Finance
(Principal Accounting Officer)


May 5, 2003









CERTIFICATIONS


I, F. Duane Ackerman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BellSouth
Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.




Date: April 29, 2003 /s/ F. Duane Ackerman
F. Duane Ackerman
Chairman of the Board, Chief
Executive Officer and President










I, Ronald M. Dykes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BellSouth
Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.




Date: April 29, 2003 /s/ Ronald M. Dykes
Ronald M. Dykes
Chief Financial Officer








EXHIBIT INDEX

Exhibit
Number

4a No instrument which defines the rights of holders of our long- and
intermediate-term debt is filed herewith pursuant to Regulation S-K,
Item 601(b)(4)(iii)(A). Pursuant to this regulation, we agree to
furnish a copy of any such instrument to the SEC upon request.

11 Computation of Earnings Per Common Share.

12 Computation of Ratio of Earnings to Fixed Charges.

99-a Statement Required by 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

99-b PricewaterhouseCoopers LLP preferability letter regarding accounting
change.