TEM Telefonica Moviles

BellSouth Reports First Quarter Earnings - 1.4 million Cingular net customer additions - 253,000 DSL net customer additions - 455,000 long distance net customer additions ATLANTA, April 21 /PRNewswire-FirstCall/ -- BellSouth Corporation (NYSE:BLS) announced first quarter 2005 earnings per share (EPS) from continuing operations of 37 cents compared to 63 cents in first quarter 2004. First quarter 2004 results included 16 cents from the gain on the sale of operations in Denmark. Normalized EPS from continuing operations was 39 cents compared to 48 cents in the same quarter a year ago. Normalizing items in the first quarter of 2005 consisted of wireless merger integration costs (1 cent) and debt extinguishment costs (1 cent). BellSouth had continued growth in key drivers in the first quarter of 2005 with a record 253,000 net DSL customer additions and solid long distance growth, while Cingular Wireless added 1.4 million net customers. "BellSouth has 65 percent of its normalized revenue positioned towards growth opportunities in wireless, broadband data, long distance and yellow pages. Our first quarter results show that BellSouth made significant progress in growing revenues and customers in all these sectors," said Duane Ackerman, Chairman and Chief Executive Officer. Reported Results from Continuing Operations For the first quarter of 2005, BellSouth's consolidated reported revenue from continuing operations totaled $5.09 billion, an increase of 2.3 percent compared to the same quarter in 2004. Income from continuing operations was $683 million compared to $1.15 billion in the same quarter of the previous year, which included a $295 million after-tax gain on the sale of operations in Denmark. Operating free cash flow from continuing operations (defined as net cash provided by operating activities less capital expenditures) was $968 million for the first quarter of 2005. Capital expenditures for continuing operations for the first quarter of 2005 were $750 million. Normalized Results from Continuing Operations Normalized results from continuing operations include BellSouth's 40 percent proportionate share of Cingular's revenues and expenses. Cingular completed its acquisition of AT&T Wireless on Oct. 26, 2004. Results prior to the acquisition date have not been restated. Normalized revenue was $8.31 billion for the first quarter of 2005 compared to $6.57 billion for the first quarter in 2004. Normalized net income was $718 million compared to $888 million for the first quarter in 2004. BellSouth's first quarter 2005 earnings related to Cingular Wireless were affected by high gross customer additions and upgrades, as well as accelerated depreciation and acquisition-related financing costs associated with the acquisition of AT&T Wireless. Communications Group In the first quarter of 2005, Communications Group revenue was $4.62 billion, an increase of 1.2 percent compared to the same quarter of 2004. First quarter operating margin was 24.2 percent compared to 25.0 percent for the full year of 2004 and up 260 basis points over the previous quarter. During the first quarter of 2005, BellSouth added a record 253,000 net DSL customers and currently serves more than 2.3 million customers. The Company is focused on driving greater broadband penetration with competitive offers and incentives to encourage customers to choose BellSouth(R) FastAccess(R) DSL over competing products. Driven by DSL, network data revenue for the first quarter was $1.16 billion, an increase of 6.3 percent compared to the same quarter of 2004. BellSouth added 455,000 mass-market long distance customers during the first quarter of 2005, and now serves nearly 6.5 million mass-market long distance customers. These customers represent more than a 50 percent penetration of BellSouth's mass-market base and spend an average of approximately $17 per month on long distance with BellSouth. During the first quarter, more than 113,000 customers added DIRECTV(R) to their communications service package bringing the total number of customers with this package to 314,000. With DIRECTV(R) and Cingular Wireless, BellSouth provides a competitively priced "grand-slam" package of wireline and wireless voice, data, and entertainment services. As of March 31, 2005, total access lines were 21.2 million, down 3.9 percent compared to a year earlier and down 137,000 compared to year-end 2004. During first quarter, retail access lines declined by 61,000, which included positive business line growth of 6,000. UNE-P access lines resold by BellSouth competitors were down 95,000 compared to year-end 2004. Cingular Wireless Cingular Wireless, the nation's largest wireless provider, added more than 1.4 million customers in the first quarter of 2005, bringing its nationwide customer base to 50.4 million customers. Cingular's gross customer additions in the first quarter totaled 4.8 million demonstrating continued momentum in the marketplace. Churn improved sequentially to 2.2 percent in the first quarter of 2005. Cingular's reported revenue was $8.2 billion for the first quarter of 2005 representing a 5.3 percent increase over pro forma revenue from the prior year period. BellSouth's normalized revenue includes its 40% share of Cingular's reported revenue. Service ARPU (average revenue per user) in the first quarter was $49.59, a decline of 3.3 percent from the prior year (pro forma) and a slight sequential decline of 38 cents (pro forma). ARPU from data services continued its strong growth in the first quarter, increasing to $3.70, up $0.81 from the previous quarter. Revenue from data services continues to grow with increased customer usage of text messaging, mobile instant messaging, mobile email, downloadable ringtones, games and photo messaging. Cingular's first quarter normalized service margin from operating income before depreciation and amortization was 25.5 percent, a 210 basis point improvement compared to the fourth quarter of 2004. The first quarter service margin was negatively impacted by approximately $135 million or 180 basis points, when compared to fourth quarter 2004, due to network access costs that were previously reported in equity earnings prior to the termination of Cingular's joint venture with T-Mobile. Cingular has reached several important milestones in the integration process of AT&T Wireless operations and services. In addition to strong consecutive quarters of net new customer growth, Cingular has migrated approximately 3 million AT&T Wireless subscribers to new Cingular postpaid plans since the close of the merger. During the first quarter, 72 percent of Cingular's subscriber base was GSM-equipped, up from 65 percent in the fourth quarter of 2004. In addition, 84 percent of the company's total combined minutes are now carried on its GSM network. Through roaming agreements with other wireless carriers, the company expanded coverage of its national wireless data network -- EDGE -- to cover more than 250 million people, with availability in 13,000 cities and towns and along nearly 40,000 miles of interstate highways across the country. Cingular is on schedule to deploy UMTS (Universal Mobile Telecommunications System) 3G network technology with HSDPA (High-Speed Downlink Packet Access), which delivers superior speeds for data and video services. Wireless capital expenditures were $971 million for the quarter. Advertising & Publishing In the first quarter of 2005, Advertising & Publishing grew revenue by 1.9 percent year-over-year to $491 million. Operating margin for the first quarter of 2005 was 47.0 percent compared to 49.6 percent in the first quarter of 2004. Segment net income was $141 million compared to $147 million in the first quarter of 2004. Discontinued Operations: Latin America The Company's financial statements reflect results for the Latin American segment in the line item titled Discontinued Operations. In January 2005, BellSouth completed the sale of its ownership interest in its wireless operations in Chile and Argentina to Telefonica Moviles S.A. (NYSE:TEM). For the first quarter, BellSouth reported income from discontinued operations of $381 million or 21 cents per share, including the after-tax gain related to the sale of the Chile and Argentina operations. Normalizing Items In the first quarter of 2005, the difference between reported (GAAP) EPS from continuing operations and normalized EPS is shown in the following table: 1Q05 1Q04 GAAP Diluted EPS - Income from continuing operations $0.37 $0.63 Wireless merger integration costs $0.01 Debt extinguishment costs $0.01 Sale of Sonofon ($0.16) Regulatory settlement $0.02 Normalized Diluted EPS - Income from continuing operations(1) $0.39 $0.48 (1) 1Q04 does not sum due to rounding Wireless merger integration costs - Represents BellSouth's 40 percent share of tax-effected wireless merger integration costs of $105 million incurred during the first quarter in connection with the Cingular/AWE merger. Debt extinguishment costs - Represents one-time expenses associated with the early extinguishment of $400 million of long-term debt. Sale of Sonofon - Gain related to the sale of our operations in Denmark. Regulatory settlement - In April 2004, BellSouth entered into a settlement agreement with respect to previously disclosed litigation (See 2004 10K for further discussion). About BellSouth Corporation BellSouth Corporation is a Fortune 100 communications company headquartered in Atlanta, Georgia. BellSouth has joint control and 40 percent ownership of Cingular Wireless, the nation's largest wireless voice and data provider with more than 50 million customers. Backed by award-winning customer service, BellSouth offers the most comprehensive and innovative package of voice and data services available in the market. Through BellSouth Answers(R), residential and small business customers can bundle their local and long distance service with dial-up and high-speed DSL Internet access, satellite television and Cingular(R) Wireless service. For businesses, BellSouth provides secure, reliable local and long distance voice and data networking solutions. BellSouth also offers online and directory advertising through BellSouth(R) RealPages.com(R) and The Real Yellow Pages(R). BellSouth believes that diversity and fostering an inclusive environment are critical in maintaining a competitive advantage in today's global marketplace. More information about BellSouth can be found at http://www.bellsouth.com/. Further information about BellSouth and Cingular's first quarter earnings can be accessed at http://www.bellsouth.com/investor. The press release, financial statements and Investor News summarizing highlights of the quarter are available on the BellSouth Investor Relations website starting today at 8 a.m. Eastern Time (ET). BellSouth will host a conference call with investors today at 10 a.m. (ET). Participating will be BellSouth CFO Ron Dykes and Investor Relations Vice President Nancy Davis. Dial-in information for the conference call is as follows: Domestic: 888-370-1863 International: 706-634-1735 The conference call will also be webcast live beginning at 10 a.m. (ET) on our website at http://www.bellsouth.com/investor. The webcast will be archived on our website beginning at approximately 1 p.m. (ET) today. A replay of the call will be available beginning at approximately 1 p.m. (ET) today, through April 28, 2005, and can be accessed by dialing: Domestic: 800-642-1687 - Reservation number: 4107441 International: 706-645-9291 - Reservation number: 4107441 In addition to historical information, this document may contain forward-looking statements regarding events and financial trends. Factors that could affect future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (i) a change in economic conditions in markets where we operate or have material investments which would affect demand for our services; (ii) the intensity of competitive activity and its resulting impact on pricing strategies and new product offerings; (iii) higher than anticipated cash requirements for investments, new business initiatives and acquisitions; (iv) unfavorable regulatory actions; and (v) those factors contained in the Company's periodic reports filed with the SEC. The forward-looking information in this document is given as of this date only, and BellSouth assumes no duty to update this information. This document may also contain certain non-GAAP financial measures. The most directly comparable GAAP financial measures, and a full reconciliation of non-GAAP to GAAP financial information, are attached hereto and provided on the Company's investor relations website, http://www.bellsouth.com/investor. BellSouth Corporation Consolidated Statements of Income - Reported Basis (unaudited) (amounts in millions, except per share data) Note to Readers: See Normalization Earnings Summary and Reconciliation to GAAP results on pages 3 and 4 for a summary of unusual items included in Reported Basis results. 1Q05 1Q04 Growth 4Q04 Growth Operating Revenues Communications group $4,593 $4,488 2.3% $4,613 -0.4% Advertising and publishing 488 479 1.9% 524 -6.9% All other 10 9 11.1% 9 11.1% Total Operating Revenues 5,091 4,976 2.3% 5,146 -1.1% Operating Expenses Cost of services and products 1,888 1,798 5.0% 2,052 -8.0% Selling, general & administrative expenses 926 909 1.9% 1,072 -13.6% Depreciation and amortization 918 898 2.2% 916 0.2% Provision for restructuring and asset impairments 7 13 -46.2% 18 -61.1% Total Operating Expenses 3,739 3,618 3.3% 4,058 -7.9% Operating Income 1,352 1,358 -0.4% 1,088 24.3% Interest Expense 291 215 35.3% 270 7.8% Other Income (Expense), net (24) 630 -103.8% (177) 86.4% Income from Continuing Operations before Income Taxes 1,037 1,773 -41.5% 641 61.8% Provision for Income Taxes 354 623 -43.2% 188 88.3% Income from Continuing Operations 683 1,150 -40.6% 453 50.8% Income (Loss) from Discontinued Operations, net of tax 381 449 -15.1% 911 -58.2% Net Income $1,064 $1,599 -33.5% $1,364 -22.0% Diluted: Weighted Average Common Shares Outstanding 1,836 1,838 -0.1% 1,836 0.0% Earnings Per Share: Income from Continuing Operations $0.37 $0.63 -41.3% $0.25 48.0% Income from Discontinued Operations $0.21 $0.24 -12.5% $0.50 -58.0% Net Income $0.58 $0.87 -33.3% $0.74 -21.6% Selected Financial and Operating Data Operating income $1,352 $1,358 -0.4% $1,088 24.3% Operating margin 26.6% 27.3% -70 bps 21.1% 550 bps Declared dividends per share $0.27 $0.25 8.0% $0.27 0.0% Capital expenditures $750 $635 18.1% $1,059 -29.2% Common shares outstanding 1,831 1,834 -0.2% 1,831 0.0% Book value per share $12.93 $11.48 12.6% $12.60 2.6% BellSouth Corporation Consolidated Statements of Income - Normalized Basis (unaudited) (amounts in millions, except per share data) Note to Readers: Our reported results, as shown on page 1, are prepared in accordance with generally accepted accounting principles (GAAP). The normalized results presented below exclude the impact of certain non-recurring or non-operating items, the details of which are provided on pages 3 and 4 of this release. In addition, the normalized results reflect our 40% proportionate share of Cingular's results, the presentation of which is not allowed under GAAP. Normalized results exclude discontinued operations from all periods. Certain reclassifications have been made to prior periods to conform to the current presentation. 1Q05 1Q04 Growth 4Q04 Growth Operating Revenues Communications group $4,521 $4,491 0.7% $4,548 -0.6% Domestic wireless 3,292 1,587 107.4% 2,848 15.6% Advertising and publishing 488 479 1.9% 524 -6.9% All other 10 9 11.1% 9 11.1% Total Operating Revenues 8,311 6,566 26.6% 7,929 4.8% Operating Expenses Cost of services and products 3,199 2,349 36.2% 3,039 5.3% Selling, general, & administrative expenses 2,085 1,464 42.4% 2,148 -2.9% Depreciation and amortization 1,588 1,119 41.9% 1,472 7.9% Total Operating Expenses 6,872 4,932 39.3% 6,659 3.2% Operating Income 1,439 1,634 -11.9% 1,270 13.3% Interest Expense 403 272 48.2% 368 9.5% Other Income (Expense), net 74 4 N/M* 35 111.4% Income Before Income Taxes 1,110 1,366 -18.7% 937 18.5% Provision for Income Taxes 392 478 -18.0% 297 32.0% Net Income $718 $888 -19.1% $640 12.2% Diluted: Weighted Average Common Shares Outstanding 1,836 1,838 -0.1% 1,836 0.0% Earnings Per Share $0.39 $0.48 -18.8% $0.35 11.4% * - Not meaningful. Selected Financial and Operating Data Operating income $1,439 $1,634 -11.9% $1,270 13.3% Operating margin 17.3% 24.9% -760 bps 16.0% 130 bps Declared dividends per share $0.27 $0.25 8.0% $0.27 0.0% Capital expenditures $750 $635 18.1% $1,059 -29.2% Common shares outstanding 1,831 1,834 -0.2% 1,831 0.0% Book value per share $12.93 $11.48 12.6% $12.60 2.6% Total employees 62,636 64,651 -3.1% 62,564 0.1% BellSouth Corporation Normalized Earnings Summary and Reconciliation to Reported Results (amounts in millions, except per share data) First Quarter 2005 Discontinued Continuing Operations Operations GAAP C (GAAP - C) Operating Revenues $5,091 $0 $5,091 Operating Expenses 3,739 - 3,739 Operating Income 1,352 - 1,352 Interest Expense 291 - 291 Other Income (Expense), net (24) - (24) Income from Continuing Operations before Income Taxes 1,037 - 1,037 Provision for Income Taxes 354 - 354 Income from Continuing Operations 683 - 683 Income (Loss) from Discontinued Operations, net of tax 381 (381) - Net Income $1,064 ($381) $683 Diluted Earnings Per Share $0.58 ($0.21) $0.37 First Quarter 2005 Normalizing Items Merger Integra- Debt tion Exting. Costs Costs Cingular A E F Normalized Operating Revenues $3,220 $0 $0 $8,311 Operating Expenses 3,175 (42) - 6,872 Operating Income 45 42 - 1,439 Interest Expense 112 - - 403 Other Income (Expense), net 76 - 22 74 Income from Continuing Operations before Income Taxes 9 42 22 1,110 Provision for Income Taxes 9 21 8 392 Income from Continuing Operations - 21 14 718 Income (Loss) from Discontinued Operations, net of tax - - - - Net Income $0 $21 $14 $718 Diluted Earnings Per Share $0.00 $0.01 $0.01 $0.39 BellSouth Corporation Normalized Earnings Summary and Reconciliation to Reported Results (amounts in millions, except per share data) First Quarter 2004 Discontinued Continuing Operations Operations GAAP C (GAAP - C) Operating Revenues $4,976 $0 $4,976 Operating Expenses 3,618 - 3,618 Operating Income 1,358 - 1,358 Interest Expense 215 - 215 Other Income (Expense), net 630 - 630 Income from Continuing Operations before Income Taxes 1,773 - 1,773 Provision for Income Taxes 623 - 623 Income from Continuing Operations 1,150 - 1,150 Income (Loss) from Discontinued Operations, net of tax 449 (449) - Net Income $1,599 ($449) $1,150 Diluted Earnings Per Share * $0.87 ($0.24) $0.63 * Normalized earnings per share for first quarter 2004 does not sum due to rounding. First Quarter 2004 Normalizing Items Regula- tory Sale of Settle- Cingular Sonofon ment A B D Normalized Operating Revenues $1,540 $0 $50 $6,566 Operating Expenses 1,317 - (3) 4,932 Operating Income 223 - 53 1,634 Interest Expense 57 - - 272 Other Income (Expense), net (164) (462) - 4 Income from Continuing Operations before Income Taxes 2 (462) 53 1,366 Provision for Income Taxes 2 (167) 20 478 Income from Continuing Operations - (295) 33 888 Income (Loss) from Discontinued Operations, net of tax - - - - Net Income $0 ($295) $33 $888 Diluted Earnings Per Share * $0.00 ($0.16) $0.02 $0.48 * Normalized earnings per share for first quarter 2004 does not sum due to rounding. BellSouth Corporation Notes to Normalized Financial and Operating Data (pages 3 and 4) (amounts in millions, except per share data) Our normalized earnings have been adjusted for the following: (a) The periods presented have been adjusted to include our 40% proportional share of Cingular Wireless' operating results, net of eliminations for amounts charged by other BellSouth companies to Cingular. (b) Gain related to the sale of our operations in Denmark. (c) Discontinued Operations - In March 2004, we announced our intention to sell our Latin American properties. Accordingly, the prior period results have been recast to reflect the Latin American operations as Discontinued Operations and thus excluded from normalized results. These amounts are reported net of a $405 tax benefit in the first quarter of 2004. The first quarter 2005 results include an after-tax gain of $390 related to the final 2 of the 10 properties that were closed in January. (d) Regulatory Settlement - In April 2004, BellSouth entered into a settlement agreement with respect to previously disclosed litigation (See 2004 10K for further discussion). (e) Wireless merger integration costs - Represents BellSouth's 40% share of tax-effected wireless merger integration costs of $105 incurred during the 1st quarter 2005 in connection with the Cingular/AWE merger. (f) Debt extinguishment costs - Represents one-time expenses associated with the early extinguishment of $400 of long-term debt. BellSouth Corporation Consolidated Balance Sheets (unaudited) (amounts in millions, except per share data) March 31, December 31, Change vs. 2005 2004 Prior Year Assets Current Assets: Cash and cash equivalents $516 $680 ($164) Short-term investments 0 16 (16) Accounts receivable, net of allowance for uncollectibles of $291 and $317 2,467 2,559 (92) Material and supplies 308 321 (13) Other current assets 907 1,055 (148) Assets of discontinued operations 0 1,068 (1,068) Total Current Assets 4,198 5,699 (1,501) Investment in and Advances to Cingular Wireless 22,265 22,771 (506) Property, Plant and Equipment, net 21,913 22,039 (126) Other Assets 7,512 7,400 112 Goodwill 0 0 0 Intangible Assets, net 1,557 1,587 (30) Total Assets $57,445 $59,496 ($2,051) Liabilities and Shareholders' Equity Current Liabilities: Debt maturing within one year $4,149 $5,475 ($1,326) Accounts payable 994 1,047 (53) Other current liabilities 3,049 3,018 31 Liabilities of discontinued operations 0 830 (830) Total Current Liabilities 8,192 10,370 (2,178) Long-Term Debt 14,669 15,108 (439) Noncurrent Liabilities: Deferred income taxes 6,351 6,492 (141) Other noncurrent liabilities 4,557 4,460 97 Total Noncurrent Liabilities 10,908 10,952 (44) Shareholders' Equity: Common stock, $1 par value 2,020 2,020 0 Paid-in capital 7,810 7,840 (30) Retained earnings 19,802 19,267 535 Accumulated other comprehensive income (80) (157) 77 Shares held in trust and treasury (5,876) (5,904) 28 Total Shareholders' Equity 23,676 23,066 610 Total Liabilities and Shareholders' Equity $57,445 $59,496 ($2,051) BellSouth Corporation Consolidated Statements of Cash Flows (unaudited) (amounts in millions, except per share data) 1Q05 1Q04 4Q04 Cash Flows from Operating Activities: Income from Continuing Operations $683 $1,150 $453 Adjustments to income from continuing operations: Depreciation and amortization 918 898 916 Provision for uncollectibles 85 115 99 Net losses (earnings) of equity affiliates 80 (104) 260 Deferred income taxes (45) 169 341 Net (gains) losses on sale or impairment of equity securities - 3 (5) Pension income (133) (121) (121) Pension settlement (gains) losses - - - Stock-based compensation expense 25 28 29 Loss on extinguishment of debt 22 - - (Gain) loss on sale/disposal of operations - (462) - Net change in: Accounts receivable and other current assets (84) (14) (148) Accounts payable and other current liabilities 23 41 (676) Deferred charges and other assets 20 (25) (21) Other liabilities and deferred credits 103 3 111 Other reconciling items, net 21 47 75 Net cash provided by operating activities 1,718 1,728 1,313 Cash Flows from Investing Activities: Capital expenditures (750) (635) (1,059) Purchase of short-term investments (12) (824) (560) Proceeds from sale of short-term investments 28 558 924 Investments in debt and equity securities (32) (140) (129) Investments in and advances to equity affiliates (2) - (14,445) Net short term (advances to) repayments from Cingular 400 - (666) Proceeds from sale of securities and operations 929 559 3,113 Proceeds from repayment of loans and advances 2 109 - Settlement of derivatives on advances - (17) - Other investing activities, net (3) (5) (4) Net cash provided by (used for) investing activities 560 (395) (12,826) Cash Flows from Financing Activities: Net borrowing (repayments) of short- term debt (1,093) (362) 2,004 Proceeds from long-term debt - - 2,389 Repayments of long-term debt (669) (7) (14) Dividends paid (494) (457) (494) Purchase of treasury shares (77) - (47) Other financing activities, net 6 48 13 Net cash used for financing activities (2,327) (778) 3,851 Net Increase/(Decrease) in Cash from Continuing Operations (49) 555 (7,662) Net Increase/(Decrease) in Cash from Discontinued Operations (115) (9) (478) Net Increase (Decrease) in Cash and Cash Equivalents (164) 546 (8,140) Cash and Cash Equivalents at Beginning of Period 680 2,947 8,820 Cash and Cash Equivalents at End of Period $516 $3,493 $680 BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Communications Group (1) 1Q05 1Q04 Growth 4Q04 Growth Operating Revenues Voice $3,159 $3,169 -0.3% $3,165 -0.2% Data 1,160 1,091 6.3% 1,163 -0.3% Other 299 304 -1.6% 311 -3.9% Total Operating Revenues 4,618 4,564 1.2% 4,639 -0.5% Operating Expenses Cost of services and products 1,821 1,741 4.6% 1,846 -1.4% Selling, general, & administrative expenses 770 745 3.4% 884 -12.9% Depreciation and amortization 910 891 2.1% 909 0.1% Total Operating Expenses 3,501 3,377 3.7% 3,639 -3.8% Segment Operating Income 1,117 1,187 -5.9% 1,000 11.7% Interest Expense 98 93 5.4% 96 2.1% Other Income (Expense), net 11 3 266.7% 12 -8.3% Income Before Income Taxes 1,030 1,097 -6.1% 916 12.4% Provision for Income Taxes 366 400 -8.5% 317 15.5% Segment Net Income(1) $664 $697 -4.7% $599 10.9% Selected Financial and Operating Data (amounts in millions) Segment operating income $1,117 $1,187 -5.9% $1,000 11.7% Segment operating margin 24.2% 26.0% -180 bps 21.6% 260 bps Long distance revenues $578 $440 31.4% $533 8.4% Switched Access MOUs 16,151 18,719 -13.7% 16,459 -1.9% BSLD MOUs 6,011 4,574 31.4% 5,864 2.5% Total Access minutes of use 22,162 23,293 -4.9% 22,323 -0.7% Capital expenditures $742 $626 18.5% $1,047 -29.1% (amounts in thousands) Wholesale lines 2,882 2,960 -2.6% 2,958 -2.6% DSL customers 2,349 1,618 45.2% 2,096 12.1% LD customers 6,470 4,596 40.8% 6,015 7.6% Consumer ARPU (3) $58.25 $53.53 8.8% $57.16 1.9% LD customer counts were adjusted from previously reported 4Q04 data to exclude 115 thousand toll block customers. BellSouth Corporation Results by Segment (unaudited) Supplemental Operating Data (in thousands) Communications Group - Network Access Lines In Service Reported (a) 1Q05 1Q04 Growth 4Q04 Growth Access lines Residence Retail Primary 11,752 12,200 -3.7% 11,771 -0.2% Additional 1,304 1,525 -14.5% 1,346 -3.1% Total Retail Residence 13,056 13,725 -4.9% 13,117 -0.5% Wholesale Resale 133 160 -16.9% 116 14.7% UNE-P 1,886 1,963 -3.9% 1,972 -4.4% Total Wholesale Residence 2,019 2,123 -4.9% 2,088 -3.3% Total Residence 15,075 15,848 -4.9% 15,205 -0.9% Business Retail Total Retail Business 5,251 5,354 -1.9% 5,245 0.1% Wholesale Resale 60 67 -10.4% 58 3.4% UNE-P 737 714 3.2% 750 -1.7% Total Wholesale Business 797 781 2.0% 808 -1.4% Total Business 6,048 6,135 -1.4% 6,053 -0.1% Other Retail/Wholesale Lines Retail 30 48 -37.5% 36 -16.7% Wholesale 66 56 17.9% 62 6.5% Total Other Retail/Wholesale Lines 96 104 -7.7% 98 -2.0% Total Access Lines in Service 21,219 22,087 -3.9% 21,356 -0.6% ISDN line equivalents Residence 9 12 -25.0% 9 0.0% Business 1,416 1,457 -2.8% 1,459 -2.9% Total ISDN Adjusted ALIS 22,644 23,556 -3.9% 22,824 -0.8% Access Line Equivalents (b) Selected digital data services: Unbundled Loops 298 354 -15.8% 309 -3.6% DS0 & ADSL 14,335 9,977 43.7% 12,828 11.7% DS1 7,861 7,341 7.1% 7,695 2.2% DS3 & higher 32,449 32,154 0.9% 32,745 -0.9% Total digital data lines in service 54,943 49,826 10.3% 53,577 2.5% Total equivalent access lines in service 77,587 73,382 5.7% 76,401 1.6% (a) Prior period operating data are often revised at later dates to reflect updated information. The above information reflects the latest data available for the periods indicated. (b) Access line equivalents represent a conversion of non-switched data circuits to a switched access line basis and is presented for comparability purposes. Equivalents are calculated by converting high-speed/high-capacity circuits to the equivalent of a switched access line based on transport capacity. While the revenues generated by access line equivalents have a directional relationship with these counts, revenue growth rates cannot be compared to line growth rates on an equivalent basis. BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Domestic Wireless Segment (1)(a) 1Q05 1Q04 Growth 4Q04 Growth Operating Revenues Service revenues (2) $2,968 $1,433 107.1% $2,526 17.5% Equipment and other revenues 324 154 110.4% 322 0.6% Total Operating Revenues 3,292 1,587 107.4% 2,848 15.6% Operating Expenses Cost of services and products 1,375 594 131.5% 1,181 16.4% Selling, general, & administrative expenses 1,159 548 111.5% 1,084 6.9% Depreciation and amortization 670 221 203.2% 556 20.5% Total Operating Expenses 3,204 1,363 135.1% 2,821 13.6% Segment Operating Income 88 224 -60.7% 27 225.9% Interest Expense 135 79 70.9% 121 11.6% Other Income (Expense), net 4 (47) 108.5% (35) 111.4% Income Before Income Taxes (43) 98 -143.9% (129) 66.7% Provision for Income Taxes (10) 39 -125.6% (56) 82.1% Segment Net Income (1) ($33) $59 -155.9% ($73) 54.8% Selected Financial and Operating Data (amounts in millions, except customer data in thousands) Segment operating income $88 $224 -60.7% $27 225.9% Segment operating margin 2.7% 14.1% -1140 bps 0.9% 180 bps Cellular/PCS Operating Metrics (100% Cingular): Total Customers 50,369 24,618 104.6% 49,109 2.6% Net Customer Additions 1,419 554 156.1% 1,713 -17.2% Partitioned Customers and/or Adjustments (159) 37 -529.7% 21,724 -100.7% Churn 2.2% 2.7% -50 bps 2.6% -40 bps Wireless Service ARPU (3) $49.59 $48.30 2.7% $49.51 0.2% Minutes Of Use Per Subscriber 508 488 4.1% 526 -3.4% Licensed POPs (4) 292 240 21.7% 290 0.7% Penetration (4) 17.7% 10.9% 680 bps 17.2% 50 bps PRO FORMA 1Q05 1Q04 Growth 4Q04 Growth Total Revenue (40%) 3,292 3,126 5.3% 3,235 1.8% Net Adds (100%) 1,419 174 N/M* 1,757 -19.2% ARPU $49.59 $51.26 -3.3% $49.97 -0.8% * - Not meaningful. (a) The domestic wireless segment is comprised of BellSouth's 40% share of the reported results of Cingular Wireless. BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Advertising & Publishing (1) 1Q05 1Q04 Growth 4Q04 Growth Operating Revenues Advertising and publishing revenues $475 $466 1.9% $475 0.0% Commission revenues 16 16 0.0% 53 -69.8% Total Operating Revenues 491 482 1.9% 528 -7.0% Operating Expenses Cost of services 90 80 12.5% 94 -4.3% Selling, general, & administrative expenses 163 156 4.5% 188 -13.3% Depreciation and amortization 7 7 0.0% 7 0.0% Total Operating Expenses 260 243 7.0% 289 -10.0% Segment Operating Income 231 239 -3.3% 239 -3.3% Interest Expense 3 2 50.0% 2 50.0% Other Income (Expense), net (1) - N/M* (1) 0.0% Income Before Income Taxes 227 237 -4.2% 236 -3.8% Provision for Income Taxes 86 90 -4.4% 91 -5.5% Segment Net Income(1) $141 $147 -4.1% $145 -2.8% Segment operating income $231 $239 -3.3% $239 -3.3% Segment operating margin 47.0% 49.6%-260bps 45.3% 170 bps * - Not meaningful. BellSouth Corporation Notes (1) Segment net income (loss) is based on normalized results which exclude certain one-time transactions and certain corporate intercompany billings. Certain intersegment revenues are not eliminated for purposes of management reporting. (2) Wireless service revenues includes activation fees, access, airtime, roaming, long distance and value added services. Roaming revenues are included on a gross basis for the Domestic Wireless segment. Average monthly revenue per customer is calculated by dividing average monthly service revenue by average customers. (3) Management uses average revenue per unit (ARPU) as an indicator of operating performance of the business. Consumer ARPU - is defined as consumer revenues during the period divided by average primary access lines during the period. Wireless Service ARPU - Cellular/PCS is defined as Cellular/PCS service revenues during the period divided by average Cellular/PCS subscribers during the period. This metric is used to compare the recurring revenue amounts being generated on our network to prior periods and internal targets. We believe that each of these metrics provides useful information concerning the performance of our initiatives to attract and retain high value customers and the use of our network. (4) Licensed POPs refers to the number of people residing in areas where Cingular and its partners have licenses to provide cellular or PCS service including areas where Cingular has not yet commenced service. Penetration calculation for 1Q05 is based on licensed "operational" POP's of 285 million. BellSouth Corporation Non-GAAP Measures - Reconciliation (amounts in millions) (unaudited) Segment Net Income Reconciliation to GAAP Net Income 1Q05 1Q04 4Q04 Communications group segment net income $664 $697 $599 Domestic wireless group segment net income (33) 59 (73) Advertising and publishing group segment net income 141 147 145 Corporate, eliminations and other (54) (15) (31) Normalized net income 718 888 640 Add back Excluded non-recurring or non-operational items (a) 346 711 724 Consolidated GAAP net income $1,064 $1,599 $1,364 Free Cash Flow 1Q05 1Q04 4Q04 Net cash provided by operating activities $1,718 $1,728 $1,313 Less Capital Expenditures (750) (635) (1,059) Operating Free Cash Flow $968 $1,093 $254 Net Debt March 31, December 31, 2005 2004 Total Debt $18,818 $20,583 Less Cash (516) (680) Net Debt $18,302 $19,903 Communications Group Operating Income before Depreciation and Amortization 1Q05 1Q04 4Q04 Operating Revenues $4,618 $4,564 $4,639 Operating Income 1,117 1,187 1,000 Add back Depreciation and amortization 910 891 909 Operating Income before Depreciation and Amortization $2,027 $2,078 $1,909 Margin 43.9% 45.5% 41.2% Domestic Wireless Operating Income before Depreciation and Amortization 1Q05 1Q04 4Q04 Service revenues $2,968 $1,433 $2,526 Equipment and other revenues 324 154 322 Operating revenues 3,292 1,587 2,848 Operating Income 88 224 27 Operating Margin (Operating income divided by operating revenues) (c) 2.7% 14.1% 0.9% Add back Depreciation and amortization 670 221 556 Operating Income before Depreciation and Amortization $758 $445 $583 Margin (Operating Income before Depr & Amort divided by service revenues)(c) 25.5% 31.1% 23.1% Domestic Wireless Pro Forma Revenue 1Q05 1Q04 4Q04 Operating Revenue $3,292 $1,587 $2,848 Add back Pro Forma Adjustments (b) - 1,539 387 Total Operating Revenue (Pro Forma) $3,292 $3,126 $3,235 Domestic Wireless Pro Forma ARPU 1Q05 1Q04 4Q04 Service revenues $2,968 $1,433 $2,526 Less Mobitex data revenues - 23 15 Add back Pro Forma Adjustments (b) - 1,404 353 Service revenue used to calculate Pro Forma ARPU $2,968 $2,814 $2,864 ARPU (Pro Forma) $49.59 $51.26 $49.97 (a) See pages 3 and 4 for detail of excluded items. (b) These adjustments are consistent in nature with those set forth in Cingular's Form 8-K dated October 25, 2004, as amended on November 29, 2004 and March 11, 2005. (c) Margin calculations for our domestic wireless segment represents 40% of Cingular's margin calculations adjusted for the related normalized items as presented on pages 3-4. DATASOURCE: BellSouth Corporation CONTACT: Jeff Battcher, Media Relations of BellSouth Corporation, +1-404-249-2793, or BellSouth Investor Relations, 1-800-241-3419 Web site: http://www.bellsouth.com/ Company News On-Call: http://www.prnewswire.com/comp/095650.html

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