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 September 30, 1999

                                       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 ___

At October 31, 1999, 1,882,319,274 common shares were outstanding.


<PAGE>
                                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 ...............   8

2.  Management's Discussion and Analysis of Results of
       Operations and Financial Condition .......................  14

3.  Qualitative and Quantitative Disclosures about Market Risk ..  27

                                     Part II
6.  Exhibits and Reports on Form 8-K ............................  29




<PAGE>
------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                              BELLSOUTH CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                     (In Millions, Except Per Share Amounts)
<S>                                            <C>            <C>                  <C>               <C>
                                                 For the Three Months                   For the Nine Months
                                                  Ended September 30,                   Ended September 30,
                                                1999              1998                1999                1998
Operating Revenues:
   Wireline communications:
      Local service .........................   $2,747          $2,542               $8,113             $7,458
      Network access ........................    1,200           1,147                3,578              3,458
      Long distance .........................      158             180                  461                532
      Other wireline ........................      310             267                  845                752
        Total wireline communications .......    4,415           4,136               12,997             12,200
   Domestic wireless ........................      815             702                2,355              2,018
   International operations .................      575             514                1,701              1,450
   Advertising and publishing ...............      540             481                1,290              1,211
   Other ....................................       77              32                  200                 76
      Total Operating Revenues...............    6,422           5,865               18,543             16,955

Operating Expenses:
   Operational and support expenses .........    3,541           3,291               10,153              9,376
   Depreciation and amortization ............    1,170           1,111                3,426              3,228
     Total Operating Expenses ...............    4,711           4,402               13,579             12,604

Operating Income ............................    1,711           1,463                4,964              4,351

Interest Expense ............................      266             218                  737                611
Gain on Sale of Operations ..................       39              --                   55                155
Net Equity in Earnings (Losses) of
   Unconsolidated Businesses ................      (26)             42                (235)                 89
Other Income, net ...........................       12              31                  170                130

Income Before Income Taxes ..................    1,470           1,318                4,217              4,114
Provision for Income Taxes ..................      455             504                1,607              1,590

     Net Income .............................   $1,015           $ 814               $2,610             $2,524

Weighted-Average Common Shares
  Outstanding:
   Basic ....................................    1,885           1,965                1,903              1,975
   Diluted ..................................    1,904           1,979                1,921              1,987
Dividends Declared Per Common Share .........    $ .19           $ .18                $ .57              $ .54
Earnings Per Share:
   Basic ....................................    $ .54           $ .41               $ 1.37             $ 1.28
   Diluted ..................................    $ .53           $ .41               $ 1.36             $ 1.27
</TABLE>


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

<PAGE>

                              BELLSOUTH CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                     (In Millions, Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                September 30,       December 31,
                                                     1999               1998
                                                 (Unaudited)
<S>                                                  <C>             <C>
ASSETS
Current Assets:
 Cash and cash equivalents ...................       $ 878           $ 3,003
 Temporary cash investments ..................         262               184
 Accounts receivable, net of
  allowance for uncollectibles
  of $293 and $251 .................                 4,794             4,629

 Material and supplies .......................         468               431
 Other current assets ........................         539               459
   Total Current Assets ......................       6,941             8,706

Investments and Advances .....................       4,863             2,861

Property, Plant and Equipment ................      60,525            57,974
Less: accumulated depreciation ...............      36,005            34,034
   Property, Plant and Equipment, net ........      24,520            23,940

Deferred Charges and Other Assets ............       1,876             1,028
Intangible Assets, net .......................       3,719             2,875

Total Assets .................................     $41,919           $39,410

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
 Debt maturing within one year ...............     $ 7,308            $3,454
 Accounts payable ............................       2,062             2,219
 Other current liabilities ...................       4,244             3,477
   Total Current Liabilities .................      13,614             9,150

Long-Term Debt ...............................       8,786             8,715

Noncurrent Liabilities:
 Deferred income taxes .......................       2,649             2,512
 Unamortized investment tax credits ..........         136               167
 Other noncurrent liabilities  ...............       3,054             2,756
   Total Noncurrent Liabilities ..............       5,839             5,435

Shareholders' Equity:
 Common stock, $1 par value
  (4,400 shares authorized;
   1,884 and 1,950
   shares outstanding) .......................       2,020             2,020
 Paid-in capital .............................       6,766             6,766
 Retained earnings ...........................      10,982             9,479
 Accumulated other comprehensive income ......      (1,057)              (64)
 Shares held in trust and treasury ...........      (4,721)           (1,752)
 Guarantee of ESOP debt.......................        (310)             (339)
   Total Shareholders' Equity ................      13,680            16,110

Total Liabilities and Shareholders' Equity ...     $41,919           $39,410

</TABLE>

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


<PAGE>


                              BELLSOUTH CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  (In Millions)
<TABLE>
<CAPTION>
                                                                                                         For the Nine Months
                                                                                                         Ended September 30,
                                                                                                       1999               1998
<S>                                                                                                   <C>                 <C>
        Cash Flows from Operating Activities:
         Net income ............................................................................     $2,610              $2,524
         Adjustments to net income:
             Depreciation and amortization .....................................................      3,426               3,228
             Provision for uncollectibles  .....................................................        260                 230
             Net equity in losses (earnings) of unconsolidated businesses ......................        235                (89)
             Minority interests in income of subsidiaries ......................................         85                  27
             Deferred income taxes and unamortized investment tax credits ......................         44                  39
             Gain on sale of operations ........................................................        (55)               (155)
             Recognition of foreign investment tax credits .....................................       (120)                 --
             Dividends received from unconsolidated businesses..................................         59                 169
         Net change in:
             Accounts receivable and other current assets ......................................       (548)               (153)
             Accounts payable and other current liabilities ....................................        710                 195
             Deferred charges and other assets .................................................       (391)               (235)
             Other liabilities and deferred credits ............................................         76                  74
         Other reconciling items, net ..........................................................         80                  42
             Net cash provided by operating activities .........................................      6,471               5,896

        Cash Flows from Investing Activities:
         Capital expenditures ..................................................................     (4,456)             (3,744)
         Investments in and advances to unconsolidated businesses ..............................     (3,751)               (566)
         Purchases of licenses and other intangible assets .....................................       (296)               (575)
         Proceeds from sale of operations ......................................................        215                 155
         Purchases of short-term investments ...................................................       (243)               (292)
         Proceeds from disposition of short-term investments ...................................        144                  98
         Proceeds from repayment of loans and advances..........................................         60                  57
         Other investing activities, net .......................................................         73                 126
             Net cash used for investing activities ............................................     (8,254)             (4,741)

        Cash Flows from Financing Activities:
         Net borrowings (repayments) of short-term debt ........................................      3,451               (127)
         Proceeds from long-term debt ..........................................................        508               1,454
         Repayments of long-term debt ..........................................................       (205)               (753)
         Dividends paid ........................................................................     (1,091)             (1,068)
         Purchase of treasury shares ...........................................................     (3,032)               (888)
         Other financing activities, net .......................................................         27                  46
             Net cash used for financing activities ............................................       (342)             (1,336)

        Net Decrease in Cash and Cash Equivalents ..............................................     (2,125)               (181)
        Cash and Cash Equivalents at Beginning of Period .......................................      3,003               2,570
        Cash and Cash Equivalents at End of Period .............................................      $ 878             $ 2,389


</TABLE>



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


<PAGE>

                             BELLSOUTH CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)
                                  (In Millions)
<TABLE>
<CAPTION>

                                                                   For the Nine Months Ended September 30, 1999
                                   --------------------- -------------------------------------------------------------------
                                        Number of Shares                     Amount
                                   --------------------- -------------------------------------------------------------------
<S>                                 <C>        <C>     <C>      <C>       <C>        <C>      <C>        <C>        <C>
                                                                                     Accum.
                                               Shares                                 Other     Shares  Guaran-tee
                                               Held In                               Compre-   Held In    of ESOP
                                     Common   Trust and  Common  Paid-in  Retained   hensive  Trust and    Debt
                                     Stock    Treasury    Stock  Capital  Earnings   Income    Treasury                Total
                                                 (a)                                             (a)

Balance at December 31, 1998 .....   2,020      (70)    $2,020   $6,766    $9,479     $(64)    $(1,752)   $(339)     $16,110

Net income .......................                                          2,610                                      2,610

Other comprehensive income, net of tax:

  Foreign currency
   translation adjustments .......                                                   (145)                             (145)
  Net unrealized losses
   on securities ..                                                                  (848)                             (848)

Total comprehensive
   income (b) ....................                                                                                    1,617

Dividends declared ...............                                        (1,079)                                    (1,079)

Share issuances for
 employee benefit plans ........                  2                          (38)                  66                    28

Purchase of treasury
  stock ........................                (68)                                           (3,032)               (3,032)

Purchase of stock by
  grantor trust ................                                                                   (3)                   (3)

ESOP activities and
  related tax benefit ...........                                             10                             29          39
                                    ------   -------   -------  ------    ------  --------   ---------  -------   ---------
Balance at September 30, 1999 ....   2,020     (136)    $2,020  $6,766   $10,982  $(1,057)    $(4,721)   $(310)     $13,680

</TABLE>

(a)......Trust  and treasury  shares are not  considered to be  outstanding  for
     financial  reporting  purposes.  As  of  September  30,  1999,  there  were
     approximately 36 shares held in trust and 100 shares held in treasury.

(b) Total comprehensive income for third quarter 1999 was $136.

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



<PAGE>


                              BELLSOUTH CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                   (Unaudited)
                                  (In Millions)

<TABLE>
<CAPTION>

                                                   For the Nine Months Ended September 30, 1998
                                          -------------------------------------------------------------------------------------

                                          Number of Shares                               Amount
                                          -------------------- ----------------------------------------------------------------
<S>                                        <C>      <C>      <C>         <C>        <C>     <C>       <C>       <C>        <C>
                                                                                             Accum.
                                                     Shares                                  Other     Shares   Guaran-tee
                                                     Held In                                 Compre-   Held In     of ESOP
                                            Common  Trust and   Common   Paid-in   Retained  hensive  Trust and     Debt
                                            Stock   Treasury     Stock   Capital   Earnings  Income    Treasury              Total
                                                       (a)                                               (a)

Balance at December 31, 1997 ............... 1,010     (18)     $1,010   $7,714     $7,382     $ 36      $(575)    $(402)  $15,165

Net income .................................                                         2,524                                   2,524

Other comprehensive income, net of tax:

  Foreign currency translation adjustments .                                                    (38)                           (38)

Total comprehensive income (b)..............                                                                                 2,486

Dividends declared .........................                                       (1,064)                                 (1,064)

Share issuances for employee benefit plans .              1                (29)                              68                 39

Acquisition-related transactions ...........              1                  92                              33                125

Purchase of treasury stock .................           (14)                                               (888)              (888)

Purchase of stock by grantor trust .........            (1)                                                (34)               (34)

ESOP activities and related tax benefit ....                                             6                             64       70
                                             -----    -----   --------  -------    -------   ------   ---------  -------- --------
Balance at September 30, 1998 .............. 1,010     (31)     $1,010   $7,777     $8,848    $ (2)    $(1,396)    $(338)  $15,899
</TABLE>


(a)......Trust  and treasury  shares are not  considered to be  outstanding  for
     financial  reporting  purposes.  As  of  September  30,  1998,  there  were
     approximately 18 shares held in trust and 13 shares held in treasury.

(b)  Total comprehensive income for third quarter 1998 was $807.

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



<PAGE>

                              BELLSOUTH CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                              (Dollars In Millions)

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  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 and
previous quarterly reports on Form 10-Q.

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

Note B - New Accounting Pronouncements

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

                                 Third Quarter       Year-to-Date
                                     1999                1999
Income before income taxes ......    $ 123              $ 383
Net income ......................    $ 80               $ 240
Earnings per share ..............    $ .04               $ .12

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

Note C -  Earnings Per Share

Prior period  amounts  related to  weighted-average  common shares and dividends
declared per common share have been  adjusted  for the  two-for-one  stock split
which  occurred in December  1998.  The  following  is a  reconciliation  of the
weighted-average  share amounts (in millions) used in  calculating  earnings per
share:

                           Third Quarter                 Year-to-Date
                         1999           1998          1999          1998
Basic common
 shares outstanding ... 1,885          1,965         1,903          1,975
Incremental shares
 from stock options .      19             14            18             12
Diluted common shares
 outstanding .....      1,904          1,979         1,921          1,987

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




<PAGE>


                              BELLSOUTH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)
                              (Dollars In Millions)


Note D - Segment Information

We have four reportable  operating segments:  (1) Wireline  communications;  (2)
Domestic  wireless;  (3)  International  operations;  and  (4)  Advertising  and
publishing.  We have  included the  operations of all other  businesses  falling
below the reporting  threshold in the "Other" segment.  The "Reconciling  items"
shown below  include  Corporate  Headquarters  and capital  funding  activities,
intercompany  eliminations  and other  nonoperating  items.  The following table
provides information for each operating segment:

<TABLE>


<S>                               <C>      <C>         <C>  <C>       <C>           <C>
                                    Third Quarter        %     Year-to-Date         %
                                    1999      1998   Change  1999        1998    Change
Wireline communications
External revenues .............   $4,415   $ 4,136     6.7  $ 12,997  $ 12,200      6.5
Intersegment revenues .........       66        59    11.9       233       151     54.3

  Total revenues ..............   $4,481   $ 4,195     6.8  $ 13,230  $ 12,351      7.1
Operating income ..............   $1,438   $ 1,145    25.6  $  4,241  $  3,547     19.6
Segment net income ............   $  817   $   667    22.5  $  2,399  $  1,994     20.3

Domestic wireless
External revenues .............   $  815   $   702    16.1  $  2,355  $  2,018     16.7
Intersegment revenues .........        5        1     N/M*       12         5      N/M*

  Total revenues ..............   $  820   $   703    16.6  $  2,367  $  2,023     17.0
Operating income ..............   $  108   $   104     3.8  $    309  $    289      6.9
Net equity in earnings
 (losses) of
  unconsolidated  businesses ..   $   36   $    42   (14.3) $    108  $    120    (10.0)
Segment net income ............   $   76   $    79    (3.8) $    214  $    222     (3.6)

International operations
External revenues .............   $  575   $   514    11.9  $  1,701  $  1,450     17.3
Intersegment revenues .........        1        --     N/M         1        --      N/M
  Total revenues ..............   $  576   $   514    12.1  $  1,702  $  1,450     17.4
Operating income ..............   $   31   $    42   (26.2) $    152  $    158     (3.8)
Net equity in earnings
 (losses) of
  unconsolidated  businesses ..   $   (3)  $     2     N/M  $      5  $    (33)     N/M

Segment net income (loss) .....   $    9   $     5    80.0  $     39  $    (22)     N/M

Advertising and publishing
External revenues .............   $  540   $   481    12.3  $  1,290  $  1,211      6.5
Intersegment revenues .........        2        --     N/M         8        --      N/M
  Total revenues ..............   $  542   $   481    12.7  $  1,298  $  1,211      7.2
Operating income ..............   $  259   $   233    11.2  $    561  $    527      6.5
Net equity in earnings
 (losses) of
  unconsolidated  businesses ..   $    1   $   --       N/M  $    (4) $   --        N/M
Segment net income ............   $  160   $   143    11.9  $    342  $    331      3.3
</TABLE>


*  Not Meaningful


<PAGE>


                              BELLSOUTH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)
                              (Dollars In Millions)

Note D - Segment Information (continued)

<TABLE>


<S>                               <C>     <C>     <C>      <C>       <C>        <C>
                                   Third Quarter   %         Year-to-Date         %
                                   1999    1998  Change    1999       1998      Change
Other
External revenues ................$  77   $  32   140.6    $ 200     $ 76       163.2
Intersegment revenues ............  102      58    75.9      264      165        60.0
  Total revenues .................$ 179   $  90    98.9    $ 464    $ 241        92.5
Operating loss ...................$ (72)  $ (75)    4.0    $(224)   $(215)       (4.2)
Net equity in earnings
 (losses) of
  unconsolidated  businesses......$   3    $ (2)    N/M     $  3     $  2        50.0
Segment net loss .................$ (39)  $ (50)   22.0    $(155)   $(121)      (28.1)

Reconciling items
Intersegment revenues ............$(176) $ (118)  (49.2)  $ (518)   $ (321)     (61.4)
Operating income (loss) ..........$ (53)   $ 14     N/M   $  (75)     $ 45        N/M
Net equity in earnings
 (losses) of
  unconsolidated  businesses
  (Note G)........................$ (63) $  --      N/M   $ (347)    $  --        N/M
Segment net income (loss).........$  (8) $ (30)    73.3   $ (229)    $ 120        N/M

</TABLE>


Note E - Investment in Qwest

In  May  1999,  we  acquired  a 10%  equity  interest  in  Qwest  Communications
International Inc. through the purchase of 74,000,000 shares of common stock for
a total of $3.5 billion.  The  investment is accounted for under the cost method
of accounting. The stock purchase agreement included certain restrictions on our
ability to transfer these shares for a two-year period,  with provisions for the
early termination of these restrictions under certain circumstances.

As a result of Qwest's proposed merger with US WEST, these transfer restrictions
have   terminated.   Accordingly,   these   securities  are  now  classified  as
available-for-sale  under Statement of Financial  Accounting  Standards No. 115,
"Accounting for Certain  Investments in Debt and Equity  Securities" (SFAS 115).
SFAS 115 requires  that  available-for-sale  securities be carried at fair value
with changes in market value recorded as a separate  component of  shareholders'
equity. Unrealized losses at September 30, 1999 were $851 (net of a deferred tax
benefit of $458).


<PAGE>

                              BELLSOUTH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)
                              (Dollars In Millions)

Note F - Marketable Securities

We have investments in marketable securities, primarily common stocks, which are
considered  available-for-sale  under  SFAS  115.  These  investments  have been
included in our balance sheet under the caption Investments and Advances.  Under
SFAS 115, available-for-sale securities are required to be carried at their fair
value,  with  unrealized  gains and losses  (net of income  taxes)  recorded  in
Accumulated  Other  Comprehensive  Income  (Loss) in our statement of changes in
shareholders'   equity  and  comprehensive   income.  The  fair  values  of  our
investments in marketable  securities are determined based on market quotations.
The  table  below  shows  certain  summarized   information   related  to  these
investments at September 30, 1999:

                                      Gross        Gross
                                   Unrealized    Unrealized
                         Cost         gains        losses      Fair Value

  Investment in Qwest   $3,500        $ --         $1,309        $2,191
  Other investments ..     132           9            --            141
      Total  .........  $3,632         $ 9         $1,309        $2,332


Note G -  Devaluation of Brazilian Currency

We hold equity  interests in two wireless  communications  operations in Brazil.
During  January 1999,  the  government  of Brazil  allowed its currency to trade
freely against other currencies.  As a result,  the Brazilian Real experienced a
devaluation  against the US Dollar. The devaluation and subsequent  fluctuations
in the exchange rate resulted in our Brazilian wireless properties recording net
currency  losses  related to their net US  Dollar-denominated  liabilities.  Our
share of the  foreign  currency  losses was $75 for the third  quarter  and $355
year-to-date.

Note H - Issuance of Debt

In August  1999,  we issued  $517 of 7 3/8% bonds due  August 1,  2039.  The net
proceeds of $501 from this issuance were used to refinance a portion of the $2.5
billion in  commercial  paper  borrowings  associated  with the financing of our
investment in Qwest.

Note I -  Sublease of Communications Towers

In June 1999, we signed a definitive agreement with Crown Castle  International,
Inc. for the sublease of all unused space on approximately 1,850 of our wireless
communications  towers in exchange for $610 to be paid in a combination  of cash
and Crown common stock.  The transaction will occur in several phases that began
in second quarter 1999 and will continue  through the remainder of 1999. We will
retain,  outside of the leases, a portion of the towers for use in operating our
wireless network. Under the agreement,  Crown will manage, maintain and remarket
the  remaining  space  on  the  towers.   We  also  entered  into  a  five-year,
build-to-suit agreement with Crown covering up to 500 towers.

In a  similar  transaction,  we  signed a  definitive  agreement  with  Crown to
sublease through a master sublease  agreement all unused space on 773 PCS towers
for which we will receive  approximately $200. In addition, we have entered into
an exclusive three-year, build-to-suit agreement.


<PAGE>


                              BELLSOUTH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)
                              (Dollars In Millions)

Note J -  Gain on Sale of Operations

In August 1999 we sold our 100%  ownership  interest in  Honolulu  Cellular  for
total  proceeds of $194.  In April 1999, we sold our 100% interest in a wireless
property located in Dothan,  Alabama for total proceeds of $21. The pretax gains
on these sales were $39 ($23 after tax) and $16 ($10 after tax), respectively.

In 1997, we sold our 20% interest in ITT World  Directories to ITT  Corporation.
The sale  agreement  contained  provisions  that  called  for  additional  sales
proceeds to be paid to us in the event that ITT subsequently  resold ITTWD above
a certain  price.  As a result of ITT's  subsequent  sale of ITTWD,  we received
additional  proceeds  that  resulted in a pretax gain of $155 ($96 after tax) in
the first quarter of 1998.

 .
Note K - Supplemental Cash Flow Information

                              Year-to-Date
                           1999            1998
Cash Paid For:

   Income taxes ....     $ 1,113         $ 1,285
   Interest ........      $ 667           $ 572


Note L - Summary Financial Information for Equity Investees

The following table displays the summary unaudited financial information for our
equity method businesses. These amounts are shown on a 100-percent basis.

                            Third Quarter     %       Year-to-Date      %
                          1999       1998  Change    1999     1998   Change
  Revenues  .........   $1,386     $1,042   33.0   $3,826   $2,589    47.8
  Operating income ..    $ 146     $   85   71.8   $  308   $  118   161.0
  Net loss ..........   $ (143)    $  (18)   N/M   $ (760)  $   (3)    N/M




Note M - Contingencies

Following the  enactment of the  Telecommunications  Act of 1996,  our telephone
company  subsidiary,  BellSouth  Telecommunications,  Inc.  (BST),  entered into
interconnection  agreements  with various  competitive  local exchange  carriers
(CLECs).  These  agreements  provide  for,  among other  things,  the payment of
reciprocal  compensation  for local  calls  initiated  by the  customers  of one
carrier that are completed on the network of the other  carrier.  Numerous CLECs
have claimed entitlement from BST for compensation associated with dial-up calls
originating  on BST's network and  connecting  with Internet  service  providers
(ISPs) served by the CLECs'  networks.  It is our position that dial-up calls to
ISPs are not local  calls for which  terminating  compensation  is due under the
interconnection agreements.

In  February  1999,  the FCC issued a decision  that such ISP  traffic  does not
terminate at the ISP and, therefore, is interstate in nature, rather than local.
The  FCC  stated,  however,  that  it  would  not  interfere  with  prior  state
commissions'  decisions  regarding this matter.  The courts and state regulatory
commissions  in BST's  operating  territory  that have  considered  the  matter,
however, have generally ruled that such calls invoke the reciprocal compensation
obligation.  We  continue  to believe  that we have a good  legal  basis for our
position.  At September 30, 1999, our exposure  related to these disputed claims
was approximately $210, including accrued interest.

<PAGE>

                              BELLSOUTH CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)
                              (Dollars In Millions)

Other reciprocal compensation issues

In a related matter, at least one CLEC is claiming  terminating  compensation of
approximately  $140 for service  arrangements  that we do not  believe  involves
traffic under BST's  interconnection  agreement.  BST has filed a complaint with
the state regulatory  commission asking that agency to declare that BST does not
owe  reciprocal  compensation  for  these  arrangements.  The CLEC  has  filed a
complaint with the state regulatory commission asking it to order BST to pay the
disputed  amounts.  Hearings  on this  matter  were  held in  August  1999 and a
decision is pending. We believe that we have a good legal basis for our position
and,  accordingly,  no  provision  has been  recorded  for  this  claim in these
financial statements.


Note N - South Carolina Regulatory Matters

Beginning in 1996,  BST operated under a price  regulation  plan approved by the
South  Carolina  Public Service  Commission  under existing state laws. In April
1999,  however,   the  South  Carolina  Supreme  Court  invalidated  this  price
regulation  plan.  In July 1999,  BST 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 BST's earnings  during the 1996-1998  period when it operated under
the subsequently invalidated price regulation plan. The Commission granted BST's
motion to dismiss the petition on November 4, 1999.

Note O - Foreign Investment Tax Credits

The  reduction in our effective tax rate during third quarter 1999 was primarily
driven by the  recognition  of  investment  tax  credits  by one of our  foreign
subsidiaries.  The credits were claimed by the subsidiary but were denied by the
national taxing  authority.  A tax  contingency  reserve was established at that
time  while the  matter was under  appeal.  In  September  1999,  we  received a
favorable ruling on our appeal leading to the recognition of the benefit.



<PAGE>


                              BELLSOUTH CORPORATION
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                       OPERATIONS AND FINANCIAL CONDITION
                 (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 Results of Operations and Financial  Condition (MD&A)
in  conjunction  with the MD&A in our  latest  annual  report  on Form  10-K and
previous quarterly reports on Form 10-Q.

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

Key  financial  and  operating  data for third  quarter  1999 and 1998,  and the
respective year-to-date periods are as follows:

<TABLE>
<CAPTION>

                                    Third Quarter         %            Year-to-Date            %
                                ----------- ---------             ----------- -------------
                                   1999      1998       Change       1999         1998       Change
                                ----------- --------- ---------- ---------- ------------- ----------
<S>                                 <C>       <C>           <C>    <C>          <C>             <C>
Revenues                            $6,422    $5,865        9.5    $18,543      $ 16,955        9.4
------------------------------------------- --------- ---------- ---------- ------------- ----------
Expenses                            $4,711    $4,402        7.0    $13,579      $ 12,604        7.7
------------------------------------------- --------- ---------- ---------- ------------- ----------
EBITDA   (a)                        $2,881    $2,574       11.9     $8,390        $7,579       10.4
------------------------------------------- --------- ---------- ---------- ------------- ----------
EBITDA margin                       44.9%     43.9%    +100bps      45.2%         44.7%     +50bps
------------------------------------------- --------- ---------- ---------- ------------- ----------
Access line counts (000's):
------------------------------------------- --------- ----------
   Switched access lines            24,440    23,869        2.4
------------------------------------------- --------- ----------
   Access line equivalents(b)       18,349    13,470       36.2
------------------------------------------- --------- ----------
     Total equivalent
      access lines                  42,789    37,339       14.6
------------------------------------------- --------- ---------- ---------- ------------- ----------
Digital and data services
 revenues                             $698     $ 534       30.7     $2,004       $ 1,493       34.2
------------------------------------------- --------- ---------- ---------- ------------- ----------
Convenience feature revenues          $481     $ 428       12.4     $1,381       $ 1,175       17.5
------------------------------------------- --------- ---------- ---------- ------------- ----------
Access minutes of use
 (millions)                         27,858    26,438        5.4     82,310        77,760        5.9
------------------------------------------- --------- ---------- ---------- ------------- ----------
Proportionate wireless
 customers (000's):
----------------------------------- ------- --------- ----------
   Domestic(c)....                   5,135     4,423       16.1
------------------------------------------- --------- ----------
   International(d)                  5,163     2,933       76.0
------------------------------------------- --------- ----------
</TABLE>

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

(b) Represents  the  approximate  number of switched  access lines that would be
    functionally equal to non-switched,  high-capacity digital and data circuits
    in service.

(c) During   fourth   quarter  1998,   we   reorganized   our  Los  Angeles  and
    Houston/Galveston  cellular partnerships with AT&T. During the third quarter
    of 1999,  we sold our Honolulu  Cellular  operations.  We have restated 1998
    domestic  wireless  customers  to reflect  these  changes and  provide  more
    meaningful comparative information for existing operations.

(d) During  fourth  quarter 1998, we sold our interest in BellSouth New Zealand.
    We have  restated  1998  international  wireless  customers  to exclude  the
    customers of BellSouth New Zealand and provide more  meaningful  comparative
    information for existing operations.
<PAGE>


------------------------------------------------------------------------------
Overview
------------------------------------------------------------------------------

Net income and earnings per share for third  quarter and  year-to-date  1999 and
1998 are as  follows  (all  references  to  earnings  per share are on a diluted
basis):

                        Third Quarter                Year-to-Date
                       -----------------         --------------------
                                            %                            %
                       1999     1998     Change     1999     1998      Change
                       -------- -------- ------- -------- ----------- ---------
As Reported:
---------------------- -------- -------- ------- -------- ----------- ---------
  Net income .....      $1,015    $ 814    24.7   $ 2,610    $ 2,524       3.4
---------------------- -------- -------- ------- -------- ----------- ---------
  Earnings per share     $ .53    $ .41    29.3   $  1.36    $  1.27       7.1
---------------------- -------- -------- ------- -------- ----------- ---------
Normalized:
---------------------- -------- -------- ------- -------- ----------- ---------
  Net income .....        $972    $ 814    19.4   $ 2,847    $ 2,428      17.3
---------------------- -------- -------- ------- -------- ----------- ---------
  Earnings per share     $ .51    $ .41    24.4   $  1.48    $  1.22      21.3
---------------------- -------- -------- ------- -------- ----------- ---------

On a  quarter-over-quarter  and year-to-date  comparative basis, results reflect
strong revenue growth in the core wireline  business  driven by digital and data
services  revenues and significant  increases in our  international and domestic
wireless customer bases.  Expense growth was driven by increased spending in the
core  wireline  business for  customer  service and network  support  functions,
volume-driven  increases at our international  and domestic wireless  businesses
and  expenses  for  development  and  promotion  of  new  business  initiatives,
including high-speed data and Internet service offerings.

Normalized results for the 1999 periods exclude the impacts of:

*      The devaluation of the Brazilian Real. Our share of the foreign  currency
       losses in our  Brazilian  wireless  properties  reduced net income by $75
       ($0.04 per share) and $355  ($0.18 per share),  respectively,  during the
       quarterly  and  year-to-date  periods  (these  losses are included in Net
       Equity in Earnings (Losses) of Unconsolidated Businesses);

*      The recognition of certain foreign investment tax credits generated in
       prior years, which increased net income by $95 ($0.05 per share); and

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

Net income for the 1998 year-to-date  period is normalized for the first quarter
1998 gain related to the sale of our investment in ITT World  Directories of $96
($0.05 per share).

On January 1, 1999, we adopted a new accounting  standard on  capitalization  of
internal-use software.  The  period-over-period  impact of capitalizing software
costs  under the new  standard  was a benefit of $80 ($0.04 per share) for third
quarter 1999 and a benefit of $240 ($0.12 per share) for year-to-date 1999.


-------------------------------------------------------------------------------
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:  (1) Wireline  communications;  (2) Domestic wireless;  (3)
International  operations;  and (4) Advertising and publishing. We have included
the operations of all other businesses falling below the reporting  threshold in
the "Other" segment.  We evaluate the performance of each business unit based on
net income,  exclusive of charges for use of  intellectual  property  rights and
adjustments for special items that may arise. Intersegment revenues and expenses
are not eliminated.  Special items are  transactions or events that are included
in reported  consolidated  results but are excluded from segment  results due to
their nonrecurring or nonoperational nature.

The  results of  businesses  in which we own  noncontrolling  interests  are not
included in our  reported  revenues  and  expenses  but are  included in the Net
Equity in Earnings (Losses) of Unconsolidated Businesses line item.


<PAGE>

-------------------------------------------------------------------------------
Wireline Communications
-------------------------------------------------------------------------------

Wireline  communications  includes local exchange,  network access and intraLATA
long  distance  services to business and  residential  customers in a nine-state
region located in the southeastern US.


                      Third Quarter              Year-to-Date          %
                    ------------------     %    --------------------
                     1999     1998      Change    1999        1998     Change
------------------- --------- -------- -------- -------- ----------- ----------

Operating revenues:
   Local service      $2,747   $2,542      8.1   $8,113      $7,458        8.8
   Network access      1,200    1,147      4.6    3,578       3,458        3.5
   Long distance         158      180   (12.2)      461         532     (13.3)
   Other wireline        310      267     16.1      845         752       12.4
   Intersegment
    revenues              66       59     11.9      233         151       54.3
------------------- --------- -------- -------- -------- ----------- ----------
     Total
     operating
     revenues         $4,481   $4,195      6.8  $13,230     $12,351        7.1
------------------- --------- -------- -------- -------- ----------- ----------
Operating expenses    $3,043   $3,050    (0.2)  $ 8,989     $ 8,804        2.1
------------------- --------- -------- -------- -------- ----------- ----------
Operating income      $1,438   $1,145     25.6  $ 4,241     $ 3,547       19.6
------------------- --------- -------- -------- -------- ----------- ----------
Segment net income     $ 817    $ 667     22.5  $ 2,399     $ 1,994       20.3
------------------- --------- -------- -------- -------- ----------- ----------

------------------- --------- -------- -------- -------- ----------- ----------
EBITDA                $2,306   $1,992     15.8  $ 6,792     $ 6,056       12.2
------------------- --------- -------- -------- -------- ----------- ----------
EBITDA margin          51.5%    47.5%  +400bps    51.3%       49.0%    +230bps
------------------- --------- -------- -------- -------- ----------- ----------


Operating Revenues

Local service
The  $205  and  $655   increases  in  local   service   revenues  for  the  1999
quarter-to-date  and  year-to-date  periods,  respectively,  are attributable to
growth in switched  access lines and strong demand for digital and data services
and convenience features.

We ended the third quarter with over 42 million total  equivalent  access lines,
an increase of 14.6% since  September  30, 1998.  Residential  access lines rose
3.4% to 16,889,000,  driven by economic growth in our nine-state  region as well
as demand for  secondary  residence  lines for home  office  purposes,  Internet
access and children's  phones. We added 329,000 secondary  residence lines since
September  30,  1998,  extending  the  total to  almost  2.5  million  lines and
increasing the penetration rate to 17.3%. Business access lines,  including both
switched  access  lines and data  circuits,  grew 23.6%  propelled  by expanding
demand for our digital and data services.  Switched  business access line growth
was flat reflecting  continued  migration of new and existing business customers
to high-capacity data lines.

Revenues from optional  convenience  features  such as custom  calling  features
(e.g., Caller ID, Call Waiting, Call Return) and MemoryCall(R) service increased
$53 (12.4%)  quarter-over-quarter and $206 (17.5%) on a year-to-date comparative
basis.  We continued to drive growth of  convenience  feature  usage through our
Complete Choice(R) package, a one-price bundled offering of over 20 features.

Increased  penetration of extended local area calling plans also increased local
service  revenues by  approximately  $48 compared to third quarter 1998 and $139
compared to the first nine months of 1998. Also  contributing to the increase in
revenues for the quarter and  year-to-date  periods were net rate impacts of $54
and $115, respectively.  The rate impacts were primarily attributable to sharing
accruals recorded in the prior periods. The growth in local service revenues for
the 1999 periods was  partially  offset by declines in revenues  from our public
payphone subsidiary.

Network access
Network  access  revenues  grew $53 in third quarter and $120 for the first nine
months of 1999 when  compared  to the same 1998  periods,  due largely to higher
demand.  Access minutes of use rose 5.4% to 27,858 million in third quarter 1999
from 26,438 million in third quarter 1998. For the year-to-date  period,  access
minutes  of use grew 5.9% from  77,760 in 1998 to 82,310 in 1999.  Increases  in
switched  access lines and  promotional  activities  by long  distance  carriers
continue  to be the  primary  drivers of the  increase  in  minutes of use.  The
February 1999  introduction  of 1+ dialing  parity for  intraLATA  long distance
calls in all states in our wireline  territory is also contributing to growth in
minutes.
<PAGE>

The growth rate in total minutes of use  continues to be negatively  impacted by
the trend of business customers migrating from traditional  switched circuits to
higher  capacity  dedicated  circuits which are  fixed-charge  based rather than
per-minute-of-use  based.  Revenues from these dedicated  circuit  services grew
approximately  $35  quarter-over-quarter  and $107 year-to-date on a comparative
basis as Internet service providers and high-capacity  users increased their use
of our  network.  The  growth  rate in  switched  minutes  of use has also  been
negatively  impacted by competition from CLECs whose traffic completely bypasses
our network.

Volume-related  growth was largely  offset by net rate  impacts  that  decreased
revenues by $40 compared to third quarter 1998 and by $103 compared to the first
nine months of 1998. Rate reductions  related to the FCC's  productivity  factor
adjustment  and access  reforms were  partially  offset by  recoveries  of local
number portability costs in both 1999 periods.

Long distance
The decrease for both the quarter and year-to-date  periods compared to the same
1998 periods is primarily  attributable  to a decrease in long distance  message
volumes  (19.6% for the quarter  and 16.0% for the  year-to-date  periods).  The
decrease in the  year-to-date  period also  includes  the impact of a regulatory
ruling  related to  compensation  we receive  from long  distance  carriers  for
interconnection  to our public payphones.  Partially  offsetting these decreases
were increased  revenues from the provision of digital and data services  during
both 1999 periods and independent company settlements occurring in first quarter
1999.

Competition  from  alternative  intraLATA  long distance  carriers and increased
penetration  of extended  local area calling  plans  continue to have an adverse
impact  on our long  distance  message  volumes.  Effective  February  1999,  we
implemented  1+  dialing  parity  for all  states in our  region,  which  allows
customers to choose a competing  intraLATA long distance  carrier without having
to dial a special access code. We believe that competition in the intraLATA long
distance market will continue to adversely  impact long distance message volumes
and revenues.

Other wireline
The increase in external revenues is attributable to higher revenues in the 1999
third  quarter  and  year-to-date   periods  from  sales  of  customer  premises
equipment,  resale of paging products and services,  sales of unbundled  network
elements,  revenues  from  our  Internet  access  offering  and  interconnection
revenues  from  wireless  carriers.   At  September  30,  1999  we  had  626,000
subscribers to our BellSouth.net  (sm) service,  an increase of 107% compared to
the same 1998 period. The increase in intersegment  revenues in the 1999 periods
primarily  represents  increased business activity with our communications group
companies.

Operating Expenses

Operational and support expenses
Operational and support expenses decreased $28 (1.3)% for third quarter 1999 and
increased  $143  (2.3%) for the first nine  months of 1999 when  compared to the
same  periods  in 1998.  Adjusted  for the impact of  adopting  the new rules on
software capitalization,  expenses increased $97 (4.4%) quarter-over-quarter and
$506 (8.0%) on a year-to-date comparative basis.

For the  quarter,  the  increase  is  attributable  to  increased  costs  in the
telephone operations associated with higher business volumes, increased spending
related to Year 2000 remediation and growth in reciprocal  compensation  expense
offset by lower labor-related costs.

For the  year-to-date  period,  the  increase  was driven by higher labor costs,
primarily in customer service and network support functions,  increased spending
related to Year 2000 remediation,  growth in reciprocal compensation expense and
other  increased  costs  in the  telephone  operations  associated  with  higher
business volumes.


Also contributing to the increases for the quarter and year-to-date periods were
expenses  related  to  new  data  initiatives,   including   Asymmetric  Digital
Subscriber Line (ADSL) and integrated fiber-in-the-loop (IFITL), and promotional
expenses related to expanding our Internet customer base.
<PAGE>

We  anticipate  making ADSL service  available in 30 markets this year,  with an
addressable  market of  approximately  6 million access lines.  We are deploying
IFITL in nearly all newly built  neighborhoods  and also expect to retrofit some
200,000 existing homes in Atlanta and Miami by the end of 1999.

Depreciation and amortization
Depreciation and amortization  expense  increased $21 (2.5%) for the quarter and
$42 (1.7%) year-to-date.  The increase is primarily attributable to amortization
of capitalized  internally  developed  software.  While gross  depreciable plant
increased by $2,537  (5.1%) since  September  30,  1998,  the overall  composite
depreciation rate was slightly lower, resulting in flat depreciation expense.

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

Domestic wireless is comprised of cellular and personal  communications  service
(PCS) businesses principally within the southeastern US.


                              Third Quarter           Year-to-Date
                             ---------------  %     -----------------    %
                             1999    1998   Change    1999    1998     Change
---------------------------- ------ ------ -------- -------- -------- --------
External revenues            $ 815  $ 702     16.1   $2,355   $2,018     16.7
---------------------------- ------ ------ -------- -------- -------- --------
Intersegment revenues            5      1      N/M       12        5      N/M
---------------------------- ------ ------ -------- -------- -------- --------
     Total
     operating
     revenues                $ 820  $ 703     16.6   $2,367   $2,023     17.0
---------------------------- ------ ------ -------- -------- -------- --------
Operating expenses           $ 712  $ 599     18.9   $2,058   $1,734     18.7
---------------------------- ------ ------ -------- -------- -------- --------
Operating income             $ 108  $ 104      3.8     $309     $289      6.9
---------------------------- ------ ------ -------- -------- -------- --------
Net equity in earnings
 (losses) of unconsolidated
 businesses                    $36   $ 42   (14.3)     $108     $120   (10.0)
---------------------------- ------ ------ -------- -------- -------- --------
Segment net income             $76   $ 79    (3.8)     $214     $222    (3.6)
---------------------------- ------ ------ -------- -------- -------- --------


EBITDA                       $ 253  $ 237      6.8     $735     $672      9.4
---------------------------- ------ ------ -------- -------- -------- --------
EBITDA margin                30.9%  33.7%  -280bps    31.1%    33.2%  -210bps
---------------------------- ------ ------ -------- -------- -------- --------
Customers (a)                4,680  4,191     11.7
---------------------------- ------ ------ --------
Average monthly revenue
 per customer (a)              $51    $52    (1.9)      $51      $53    (3.8)
---------------------------- ------ ------ -------- -------- -------- --------

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

Operating Revenues

Revenue  growth of $117 for the quarter and $344  year-to-date,  compared to the
same  1998  periods,   in  the  consolidated   domestic   wireless  business  is
attributable to higher airtime,  access,  and equipment sales revenues driven by
an 11.7%  increase  in the  customer  base.  Adjusted  for the sale of  Honolulu
Cellular  in August  1999,  the  customer  growth  rate was  approximately  15%.
Advertising,  enhanced volume pricing  strategies  (including bundled minutes at
lower rates and prepaid calling plans) and competitive  incentive programs (such
as  discounted  wireless  handsets)  were key  drivers of the  customer  growth.
Revenue growth is also  attributable  to the initiation of PCS service in 25 new
markets in the  southeastern  US over the past twelve  months.  Average  monthly
revenue per customer in third quarter 1999 remained  flat  reflecting  increased
usage offset by declines in per-minute rates. The decline in per-minute rates is
due to the increasingly competitive market environment.

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


Operating Expenses

Operational and support expenses
These  expenses  increased $101 (21.7%) to $567 for the quarter and $281 (20.8%)
to $1,632 for the first nine months of 1999  compared to the same 1998  periods.
These  increases  resulted from greater  customer  acquisition  costs  primarily
associated with higher customer  additions in the 1999 periods compared to 1998.
Average acquisition costs per customer,  however,  have benefited as we shift to
lower cost,  direct  sales  channels.  In our

<PAGE>

continuing  effort to migrate our customer base from analog to digital  service,
we have moved over 50% of our  subscriber  base to  digital  and have  increased
digital minutes of use to over 60% of total network usage.  Expenses  related to
our new PCS markets also contributed to the increase.  During 1999, we initiated
service in 25 BTAs in the  southeastern  US and will  continue our build-out and
promotion of these markets throughout the remainder of 1999.

Depreciation and amortization
Depreciation and amortization  increased $12 (9.0%) to $145 during third quarter
1999 and $43 (11.2%) to $426 year-to-date compared to the same 1998 periods. The
increase was  primarily  attributable  to higher  levels of property,  plant and
equipment  since  September 30, 1998. The increased  investment is the result of
the build-out of PCS markets,  expansion of the network related to growth in the
customer base and deployment of digital  cellular across all of our consolidated
markets.

Net Equity in Earnings (Losses) of Unconsolidated Businesses

Compared  to the  same  1998  periods,  1999  equity  in  earnings  (losses)  of
unconsolidated domestic wireless businesses decreased $6 for the quarter and $12
for the  year-to-date  periods.  These  decreases are  principally  due to lower
earnings at our business in Los Angeles.  Earnings were lower due to acquisition
costs  associated  with higher  customer  additions and  increased  amortization
expense that resulted  from the  reorganization  of our  ownership  interests in
fourth quarter 1998.


-------------------------------------------------------------------------------
International Operations
-------------------------------------------------------------------------------

International operations is comprised principally of our investments in cellular
and PCS  businesses  in nine  countries in Latin  America as well as in Denmark,
Germany, India and Israel.


                                  Third Quarter         Year-to-Date
                               ----------------  %     ----------------     %
                               1999    1998    Change   1999     1998    Change
------------------------------ ------- ------ -------- ------- -------- -------
External revenues                $575   $514     11.9  $1,701   $1,450    17.3
------------------------------ ------- ------ -------- ------- -------- -------
Intersegment revenues               1     --      N/M       1       --     N/M
------------------------------ ------- ------ -------- ------- -------- -------
      Total operating
       revenues                  $576   $514     12.1  $1,702   $1,450    17.4
------------------------------ ------- ------ -------- ------- -------- -------
Operating expenses               $545   $472     15.5  $1,550   $1,292    20.0
------------------------------ ------- ------ -------- ------- -------- -------
Operating income                  $31    $42   (26.2)    $152     $158   (3.8)
------------------------------ ------- ------ -------- ------- -------- -------
Net equity in earnings
  (losses) of
  unconsolidated businesses     $ (3)    $ 2      N/M      $5    $(33)     N/M
------------------------------ ------- ------ -------- ------- -------- -------
Segment net income (loss)         $ 9    $ 5     80.0     $39    $(22)     N/M
------------------------------ ------- ------ -------- ------- -------- -------
EBITDA                           $142  $ 138      2.9    $474     $405    17.0
------------------------------ ------- ------ -------- ------- -------- -------
EBITDA margin                   24.7%  26.8%  -210bps   27.8%    27.9%  -10bps
------------------------------ ------- ------ -------- ------- -------- -------
Customers (a)                   3,777  2,370     59.4
------------------------------ ------- ------ --------
Average monthly revenue
 per customer (a)                 $50    $69   (27.5)     $55      $71   (22.5)
------------------------------ ------- ------ -------- ------- -------- -------

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

Operating Revenues

Consolidated  revenues are from our operations in Venezuela,  Argentina,  Chile,
Ecuador and Peru and, in the prior  year,  New  Zealand.  The  increases  of $62
quarter-over-quarter  and $252 year-to-date on a comparative basis are primarily
due to  substantial  growth in the  customer  bases of these  operations,  which
collectively  have  grown  almost  60%  since  September  30,  1998.   Partially
offsetting  the  impacts of customer  growth is  declining  monthly  revenue per
customer  that is  driven  by  continued  expansion  into  lower-usage  customer
segments  through  offerings  such  as  prepaid  cellular  service  as  well  as
competitive  pressures in certain countries.  During third quarter,  we extended
prepaid  cellular  products  to all  nine of the  countries  we  serve  in Latin
America.  Both the  quarter-to-date  and  year-to-date  periods  are  negatively
impacted by the absence of revenues from  BellSouth New Zealand,  which was sold
during fourth quarter 1998.  Overall weakening of local currencies also impacted
revenue growth on a US Dollar basis.

Operating Expenses

Operational and support expenses
For the 1999  periods,  these  expenses  increased $58 compared to third quarter
1998 and $183  compared to the first nine months of 1998.  These  increases  are
primarily the result of operational and customer  acquisition  costs  associated
with growth in customer levels and expanded operations. Offsetting the increases
were prior period expenses incurred by BellSouth New Zealand.

Depreciation and amortization
Depreciation   expense   increased  $15   quarter-over-quarter   and  $75  on  a
year-to-date  comparative  basis due primarily to higher gross depreciable plant
resulting from the continued  investment in our wireless network  infrastructure
and digital  conversion  of our network in Venezuela.  Amortization  expense was
relatively  flat  quarter-over-quarter  but has increased $30 on a  year-to-date
comparative  basis as a result of growth in intangibles  related to our purchase
of additional  ownership  interests in several Latin American  operations  early
last year.

Net Equity in Earnings (Losses) of Unconsolidated Businesses

Quarter-over-quarter,  net equity in earnings  (losses) from our  unconsolidated
businesses were relatively flat. The improvement in equity in earnings  (losses)
from our unconsolidated international businesses in the 1999 year-to-date period
is due  to  stronger  results  from  our  investments  in  Germany,  Panama  and
Nicaragua,  all of which experienced  substantial growth in their customer bases
compared  to the  same  periods  in 1998.  Offsetting  these  improvements  were
start-up losses related to our operations in Brazil,  which were launched in May
1998.  Improvements in the current  year-to-date period were also offset by less
favorable results from our business in Denmark due to customer acquisition costs
associated with higher customer additions.

Our  operations  in Brazil  continue  to be  affected  by  weakness in the local
economy while uncertainty  surrounding government proposed economic reforms have
weakened the local currency in recent  months.  We expect that our earnings will
continue to be affected by foreign currency gains or losses  associated with the
US Dollar-denominated debt issued by our Brazilian businesses.
<PAGE>

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

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


                           Third Quarter          Year-to-Date
                          -----------------  %    -----------------   %
                          1999     1998   Change   1999     1998    Change
---------------------------------- ------ ------- ------- -------- ---------
External revenues            $540   $481    12.3  $1,290   $1,211       6.5
---------------------------------- ------ ------- ------- -------- ---------
Intersegment revenues           2     --     N/M       8       --       N/M
---------------------------------- ------ ------- ------- -------- ---------
Total operating revenues     $542   $481    12.7  $1,298   $1,211       7.2
---------------------------------- ------ ------- ------- -------- ---------
Operating expenses           $283   $248    14.1    $737     $684       7.7
---------------------------------- ------ -------------- -------- ---------
Operating income             $259   $233    11.2    $561     $527       6.5
---------------------------------- ------ ------- ------- -------- ---------
Net equity in earnings
 (losses) of
  unconsolidated
  businesses                  $ 1    $--     N/M   $ (4)     $ --       N/M
---------------------------------- ------ ------- ------- -------- --------
Segment net income           $160   $143    11.9    $342     $331       3.3
---------------------------------- ------ ------- ------- -------- ---------

EBITDA                       $269   $239    12.6    $584     $545       7.2
---------------------------------- ------ ------- ------- -------- ---------
EBITDA margin               49.6%  49.7%  -10bps   45.0%    45.0%        --
---------------------------------- ------ ------- ------- -------- ---------

Operating Results

External revenues  increased $59 for third quarter and $79 for year-to-date 1999
when compared to the same 1998 periods. These increases are principally a result
of revenues from our new  international  investments in directory  publishers in
Peru and  Brazil.  The growth is also  attributable  to  increased  pricing  and
volumes,  offset by the  effects of shifts in  directory  production  schedules.
Adjusted  for new  businesses  and book  shifts,  external  revenues  would have
increased by  approximately  5.5% for the quarter and 3.6% for the  year-to-date
period.  To a lesser  extent,  the increased  revenues of our  electronic  media
offerings also contributed.

Operational  and support  expenses  increased  $31 for third quarter and $48 for
year-to-date 1999, when compared to the same 1998 periods,  due primarily to our
new  international  directory  publishers'  increases in  advertising  and other
marketing related costs. Depreciation and amortization was flat as there were no
significant increases in property, plant and equipment.

Net equity in  earnings  (losses)  of  unconsolidated  businesses  includes  the
results of our new investment in a Brazilian directory publisher.
<PAGE>


-------------------------------------------------------------------------------
Other
-------------------------------------------------------------------------------

This segment is primarily  comprised of our  communications  group  companies --
including new business  initiatives  such as  entertainment  (cable and wireless
television),  Internet  access,  wireless data and interLATA long distance.  The
stand-alone revenues and expenses of our Internet access marketing company which
are included in this segment are  eliminated  in  consolidation  and reported as
part of the wireline  communications results. Also included are businesses whose
primary purpose is to support our other operating segments.

                           Third Quarter            Year-to-Date
                          ---------------  %      ---------------       %
                          1999    1998   Change    1999      1998     Change
------------------------- ------ ------- -------- -------- --------- --------

------------------------- ------ ------- -------- -------- --------- --------
External revenues           $77     $32    140.6    $ 200      $ 76    163.2
------------------------- ------ ------- -------- -------- --------- --------
Intersegment revenues       102      58     75.9      264       165     60.0
------------------------- ------ ------- -------- -------- --------- --------
Total operating revenues   $179     $90     98.9    $ 464     $ 241     92.5
------------------------- ------ ------- -------- -------- --------- --------
Operating expenses         $251    $165     52.1    $ 688     $ 456     50.5
------------------------- ------ ------- -------- -------- --------- --------
Operating loss            $(72)   $(75)      4.0   $(224)    $(215)    (3.7)
------------------------- ------ ------- -------- -------- --------- --------
Net equity in earnings
 (losses) of
  unconsolidated
  businesses               $ 3    $(2)      N/M     $  3      $  2     50.0
------------------------- ------ ------- -------- -------- --------- --------
Segment net loss          $(39)   $(50)     22.0   $(155)   $ (121)   (28.1)
------------------------- ------ ------- -------- -------- --------- --------

------------------------- ------ ------- -------- -------- --------- --------
EBITDA                    $(37)   $(47)     21.3   $(125)    $(147)     15.0
------------------------- ------ ------- -------- -------- --------- --------
EBITDA margin             (20.7%) (52.2%)    N/M  (26.9%)   (61.4%)      N/M
------------------------- ------ ------- -------- -------- --------- --------

Operating Results

External  revenues were up $45 for third quarter and $124 for year-to-date  1999
when compared to the same 1998 periods. These increases were driven by growth in
revenues from interactive paging services, wireless television offerings and the
resale of interLATA  long distance  services in markets  outside of our wireline
region. Since third quarter 1998, we have rolled out wireless television service
in four new markets and introduced  interactive  paging service with  nationwide
coverage.

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


-------------------------------------------------------------------------------
Other Nonoperating Items
-------------------------------------------------------------------------------



                            Third Quarter              Year-to-Date
                           -----------------   %     ----------------   %
                           1999     1998     Change  1999    1998    Change
-------------------------- -------- -------- ------- ------ ------- ---------

Interest Expense              $266     $218    22.0   $737    $611      20.6
Gain on Sale of Operations      39       --      --     55     155       N/M
Net Equity in Earnings
 (Losses) of
 Unconsolidated
 Businesses                    (26)       42    N/M   (235)     89       N/M
Other Income, net               12       31   (61.3)   170     130      30.8
Provision for Income Taxes     455      504    (9.7) 1,607   1,590       1.1

-------------------------- -------- -------- ------- ------ ------- ---------
<PAGE>

Interest expense
Higher interest  expense in 1999 is attributable to higher average debt balances
in the  quarter and  year-to-date  periods  relative  to the 1998  periods and a
higher proportion of capitalized  interest in the 1998 periods.  The higher debt
balances in third  quarter 1999 are the result of  commercial  paper  borrowings
associated with the financing of our investment in Qwest. We also  capitalized a
greater  proportion of our interest in 1998 due to our start-up  investments  in
Brazil. Our average debt balances were as follows:


                     Third Quarter                 Year-to-Date
                   ------------------   %       ----------------------     %
                    1999     1998     Change      1999        1998     Change
------------------ -------- --------- --------- ---------- ----------- -------
Average short-term
 debt balance      $ 7,361  $ 2,973     147.6    $ 5,804     $ 3,289    76.5
------------------ -------- --------- --------- ---------- ----------- -------
Average long-term
 debt balance      $ 8,620  $ 8,743     (1.4)    $ 8,531     $ 8,050     6.0
------------------ -------- --------- --------- ---------- ----------- -------
 Total average
 debt balance       $15,981  $11,716      36.4    $14,335     $11,339    26.4
------------------ -------- --------- --------- ---------- ----------- -------

During  August 1999, we  refinanced  $501 of commercial  paper with the proceeds
from the  issuance of 7 3/8%  40-year  bonds.  We plan to  refinance  additional
commercial paper when we believe conditions are favorable.

Gain on sale of operations
During third  quarter  1999, we recognized a gain of $39 ($23 or $0.01 per share
after tax) from the sale of Honolulu  Cellular.  During second  quarter 1999, we
recognized a gain of $16 ($10 after tax) from the sale of a wireless property in
Alabama.  The 1998 year-to-date period includes a gain of $155 ($96 or $0.05 per
share after tax) from our receipt in first quarter 1998 of  additional  proceeds
related to the 1997 sale of our interest in ITT World Directories.

Net equity in earnings (losses) of unconsolidated businesses
Earnings from our unconsolidated  businesses  decreased $68 in the third quarter
and $324 in the  year-to-date  period when  compared with the same 1998 periods.
The  decreases  were  driven  by  foreign  exchange  losses  of  $75  and  $355,
respectively,   related  to  our  Brazilian   properties  (see  Note  G  to  the
consolidated  financial  statements  for  further  discussion  of this  matter).
Excluding the impact of these foreign exchange losses,  quarter-over-quarter and
year-to-date earnings increased $7 and $31,  respectively,  when compared to the
same 1998  periods.  These  results are  addressed  in the  discussions  for the
Domestic wireless and International operations segments.

Other income, net
Other income,  net includes  interest  income,  gains/losses  on  disposition of
assets, foreign currency gains/losses and miscellaneous nonoperating income. The
decrease  of $19 from third  quarter  1998 is  attributable  to higher  minority
interest  expense related to our  less-than-100-percent  owned  subsidiaries and
decreased  interest  income due to lower average cash balances.  These decreases
were partially offset by miscellaneous nonoperating items.

For the  year-to-date  period,  the increase of $40 over 1998 is attributable to
increases in other nonoperating items in the 1999 period.  Partially  offsetting
these   increases  were  higher  minority   interest   expense  related  to  our
less-than-100-percent-owned subsidiaries, decreased interest income due to lower
average cash balances and lower net foreign  exchange gains in our  consolidated
international businesses.

Provision for income taxes
The provision for income taxes decreased $49  quarter-over-quarter and increased
$17 on a  year-to-date  comparative  basis.  The  effective  tax rate for  third
quarter 1999 was 31.0%  compared to 38.2% in third quarter 1998. The decrease is
due primarily to the  recognition  of foreign  investment  tax credits offset by
higher equity losses from  unconsolidated  businesses driven by foreign exchange
losses recorded at our Brazilian operations during third quarter 1999. Excluding
these items,  our effective rate for third quarter 1999 was 36.8%. The effective
rate  was  further  reduced  by a  change  in the  mix of  income  among  taxing
jurisdictions.

For the year-to-date  period, the effective tax rate was 38.1% compared to 38.6%
in 1998. The effective tax rate was  significantly  impacted by higher equity in
losses  driven  by  foreign  currency  losses  recorded  at  our  unconsolidated
Brazilian businesses during the first and third quarters of 1999, as well as the
recognition of foreign  investment tax credits in third quarter 1999.  Excluding
the effect of these items, our effective rate for the 1999  year-to-date  period
was 37.6%.  The lower  effective  rate for the  year-to-date  period is due to a
change in the mix of income among taxing jurisdictions.

<PAGE>

------------------------------------------------------------------------------
Financial Condition
------------------------------------------------------------------------------

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

Net cash provided by (used for):
--------------------- -------- --------- -----------------------
                        1999     1998             Change
                      -------- --------- -----------------------

Operating activities.  $6,471   $5,896      $575         9.8%
Investing activities. $(8,254) $(4,741)   $(3,513)      (74.1)%
Financing activities.  $(342)  $(1,336)     $994         74.4%

--------------------- -------- --------- ------------ ----------

Net cash provided by operating activities
The increase in cash from operations primarily reflects higher EBITDA, partially
offset by an increase in working capital  requirements  and lower dividends from
our unconsolidated  businesses.  Operating cash flows for 1999 also include $493
in cash  proceeds  associated  with the closings of our  agreements  to sublease
wireless communications towers to Crown. Additional closings are scheduled to be
completed  throughout the remainder of 1999. These  transactions are expected to
generate total cash proceeds in excess of $700.

Net cash used in investing activities
During the first nine  months of 1999,  we  invested  $4.5  billion  for capital
expenditures  to support our  wireline  and  wireless  networks,  to promote the
introduction of new products and services and increase operating  efficiency and
productivity.  Significant investments are also being made to support deployment
of ADSL and fast packet switching  technologies as well as our IFITL initiative.
Included  in  these   expenditures   for  the  1999   year-to-date   period  are
approximately  $432  in  costs  related  to  the  purchase  and  development  of
internal-use software.

During second quarter 1999, our Argentine  wireless  communications  company won
its bid to acquire  additional PCS licenses.  It will pay approximately $262 for
the licenses and anticipates investing an additional $600 to build out the areas
covered by these licenses.

During  April  1999,  we  announced  a new  business  agreement  with Qwest that
included our purchasing a ten percent stake for $3.5 billion.  This  transaction
closed during May 1999. We initially funded this purchase by utilizing  existing
cash  reserves and issuing $2.5 billion in  commercial  paper,  $501 of which we
have refinanced with 7 3/8% 40-year bonds.

Net cash used in financing activities
During the first nine months of 1999, we purchased 66 million  shares as part of
a $3 billion  repurchase  plan  announced in December  1998.  Combined with 1998
repurchases  under a previous  plan,  we have reduced our number of  outstanding
shares by 74 million  since  September  30, 1998. We completed the December 1998
buyback plan during May 1999.

Our debt to total  capitalization ratio was 54.0% at September 30, 1999 compared
to 43.0% at December  31,  1998.  The  increase is a function  of  increases  in
short-term debt  attributable  to higher net borrowings of commercial  paper and
the reduction in  shareholders'  equity,  driven  primarily by the effect of our
stock buyback program.

At November 4, 1999, we had shelf  registration  statements on file with the SEC
under which $4.7 billion of debt securities could be publicly offered.

<PAGE>

Market Risk

For a complete  discussion of our market risks,  you should refer to the caption
"Market  Risk" in our 1998 Annual Report on Form 10-K.  Our primary  exposure to
market risks  relates to  unfavorable  movements  in interest  rates and foreign
currency  exchange  rates.  Our exposure to interest rate risk increased  during
1999 due to the borrowing of $2.5 billion in commercial paper for our investment
in Qwest.  We have  refinanced $501 with fixed-rate debt and intend to refinance
additional commercial paper when we believe conditions are favorable.  We do not
anticipate any significant changes in our objectives and strategies with respect
to managing such exposures.


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

Regulatory Developments

FCC order on Unbundled Network Elements
In 1996, the FCC issued an order adopting rules  governing  interconnection  and
related matters. In 1999 the U.S. Supreme Court remanded aspects of the rules to
the FCC for further consideration of the requirements in the  Telecommunications
Act of 1996; those requirements  specify that access to certain network elements
can be required only when  necessary or when the failure to provide access would
impair the ability of the requesting carrier to provide services. On remand from
the  Supreme  Court,  the FCC  issued an order on  November  5, 1999  adopting a
revised list of network elements that incumbent local exchange  carriers (ILECs)
such as ourselves must make available to competitors.

The FCC's list, together with its regulations  prohibiting ILECs from separating
currently  combined  elements,  means  that ILECs  will be  required  to provide
certain  combinations  of network  elements that  competitors may substitute for
certain  higher  priced ILEC  services.  This  substitution  may lead to further
increases in competition  for certain local exchange  access  services.  The FCC
determined that it would not apply these new rules to allow the  substitution of
certain network elements for special access services, and announced that it will
conduct  a further  inquiry  into the use of  network  element  combinations  to
provide special access services.

The FCC's revised list does not, however, require ILECs to make network elements
used to provide advanced data services available to competitors,  except in very
limited circumstances. This outcome removes a disincentive to ILEC investment in
these rapidly expanding services.

FCC announcement on universal service
On October 21, 1999 the FCC  announced a new  universal  service  mechanism  for
non-rural  carriers  serving  high-cost  areas to ensure that customers in those
areas  receive  telephone  service at affordable  rates.  BST expects to receive
support for service to residents in Alabama, Kentucky and Mississippi.  Although
the FCC has not yet issued the formal  order and thus the details are not known,
we do not  believe  the net  financial  effect  of the new  arrangement  will be
material.

Reciprocal compensation. See Note M to the consolidated financial statements.

South Carolina  regulatory  matters.  See Note N to the  consolidated  financial
statements.

International Operations

Fluctuations in foreign exchange rates
Our equity investments in international wireless systems are viewed as long-term
assets valued in the local currency, translated into US Dollars, and reported in
our  consolidated   financial   statements.   Foreign  currency   exchange  rate
fluctuations may be material to results of operations.  A significant  weakening
against the US Dollar of the  currency of a country  where we generate  revenues
and earnings may adversely  impact our results,  such as occurred in Brazil (see
Note G).

Any weakening of the US Dollar against foreign  currencies could have an adverse
impact   on   cash   flows   if   we   are   obligated   to   make   significant
foreign-currency-denominated  capital  investments.  Where we  consider it to be
economically  feasible,  we attempt to mitigate  the effect of foreign  currency
fluctuations through the use of foreign currency hedging contracts.
<PAGE>

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.  Additionally, the economies of most countries in
Latin  America  have  significant  economic  and trade ties,  and  therefore  an
economic  crisis in one country could result in adverse  impacts on others.  The
likelihood  and  extent  of  further  devaluation  and  deteriorating   economic
conditions  in Brazil or other Latin  American  countries  experiencing  similar
conditions  and the resulting  impacts on our results of  operations,  financial
position and cash flows is not known.


Euro conversion
In January 1999,  certain  member  countries of the European  Union  established
permanent,  fixed  conversion  rates between their  existing  currencies and the
European  Union's common currency (the Euro).  The Euro will be phased in over a
transition  period  culminating  on January  1, 2002 at which time all  existing
currencies will be withdrawn from circulation.  We have investments in companies
operating in Germany,  Belgium and the Netherlands,  which are  participating in
the Euro  conversion.  We do not believe  that the Euro  conversion  will have a
material effect on these investments.


Year 2000 Readiness Disclosure

      You should note that the following discussion about the Year 2000 includes
      certain   forward-looking   statements  that  are  subject  to  risks  and
      uncertainties.   Factors  that  could  cause  actual   results  to  differ
      materially from those expressed in the forward-looking statements include,
      but are not limited to:

     * Remaining  implementation and testing could reveal the need for
       additional unplanned remedial efforts and

     * Third-party  vendors and suppliers could fail to meet their stated
       objectives, timetables or cost estimates.

      Inability to reach  substantial  Year 2000  compliance  in our systems and
      integral   third-party   systems   could   result   in   interruption   of
      telecommunications  services,  interruption  or  failure  of our  customer
      billing,  operating and other  information  systems and failure of certain
      date-sensitive  equipment.  These  failures  could  result in  substantial
      claims  by   customers   as  well  as  loss  of  revenue  due  to  service
      interruption,  delays in our ability to bill our customers  accurately and
      timely, and increased expenses  associated with litigation,  stabilization
      of operations following such failures or execution of contingency plans.

During 1997, we initiated a company-wide  program to identify and address issues
associated  with the ability of our  date-sensitive  information,  telephony and
business systems and certain equipment to properly  recognize the Year 2000 as a
result of the century change on January 1, 2000. The program is also designed to
assess the readiness of other entities with which we do business.

Our Year 2000 program is divided into six phases:  planning;  inventory;  impact
analysis;  conversion;  testing;  and implementation.  Our progress within these
phases is based on the number of inventoried  items that have been addressed and
covers those business  processes that we consider  "mission  critical".  Mission
critical applications include those that:

    *   directly affect delivery of primary services to our customers;

    *   directly affect our revenue recognition and collection; and

    *   would create noncompliance with any statutes or laws.

The three main areas of focus for our Year 2000 program are network  components,
information  technology  systems and building and  environmental  systems.  Each
focus area includes the hardware,  software, embedded chips, third-party vendors
and  suppliers as well as  third-party  networks  that are  associated  with the
identified systems.
<PAGE>

As of September 1999, we have  substantially  completed the majority of our Year
2000 conversions,  tests and implementations.  We have completed all the work on
systems  that make up our key business  processes,  and they have been tested in
our labs in a Year 2000  environment.  All of our landline and wireless  central
office switches have been remediated, tested and implemented into our production
environment. We have also completed 100% of the upgrades and replacements to the
equipment  necessary for E9-1-1 services within our nine-state  wireline region.
The applications scheduled to be completed after September 1999 are of low or no
impact to our customers and/or internal  business  operations and were therefore
specifically targeted for remediation after the more critical applications.

Contingency  plans. We have developed  numerous  continuity plans for conducting
our business  operations in the event of crises,  including  system  outages and
natural disasters.  We have chartered a Year 2000 Business  Contingency Planning
project to ensure that  contingency  plans are  developed and tested and support
infrastructures  are in place.  This effort is not limited to the risks posed by
the potential Year 2000 failures of our networks,  internal  information systems
or  infrastructures,  but also includes the potential  secondary impact on us of
Year 2000  failures,  including  potential  systems  failures of third  parties.
During third quarter 1999, contingency plans were completed and tested.

Costs of project.  Some of the costs  associated  with our Year 2000  compliance
efforts were incurred in 1997 and 1998. We will incur the remainder  during 1999
and 2000. At September 30, 1999,  we have spent  approximately  $220 in external
costs towards Year 2000 compliance.  We estimate the total external costs of our
compliance efforts will be approximately $265 over the life of the project.

Expected  completion.  We currently  anticipate that the remaining  applications
will be Year 2000  compliant in fourth  quarter 1999.  Unforeseen  circumstances
such as those discussed  previously could affect our current  assessments.  As a
result, we are unable to determine the impact that any system interruption would
have on our results of operations, financial position and cash flows.

New Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities".  The standard requires that all derivative
instruments  be recognized as assets or  liabilities  and adjusted to fair value
each period.  During June 1999,  the FASB  postponed the required  adoption date
until  January 1, 2001. We plan to adopt SFAS No. 133 on January 1, 2001 and are
currently  assessing  the  impact  that  adoption  will have on our  results  of
operations and financial position.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

<PAGE>

-------------------------------------------------------------------------------
Cautionary Language Concerning Forward-Looking Statements
-------------------------------------------------------------------------------

In addition to  historical  information,  management's  discussion  and analysis
contains  forward-looking  statements regarding events and financial trends that
may affect our future operating results and financial position. 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.

Factors that could affect future  operating  results and financial  position and
could cause  actual  results to differ  materially  from those  expressed in the
forward-looking statements are:

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

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

*    further delay in our entry into the interLATA long distance market;

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

*    unanticipated   higher   capital   spending  from  the  deployment  of  new
     technologies;

*    unsatisfactory  results in  regulatory  actions  including  access  reform,
     universal service,  terms of interconnection and unbundled network elements
     and resale rates; and

*    failure to  satisfactorily  identify  and complete  Year 2000  software and
     hardware revisions by us and third parties.

This  list  of  cautionary  statements  is  not  exhaustive.   These  and  other
developments  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 have no  obligation  to publicly  release the
results of any revisions to these  forward-looking  statements to reflect events
or circumstances after the date of this filing.




<PAGE>



------------------------------------------------------------------------------
PART II -- OTHER INFORMATION
------------------------------------------------------------------------------


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.

     10q-7  Amendment  dated  September 13, 1999 to the BellSouth
            Personal  Retirement Account Pension Plan.

     10ee   Retirement Agreement dated October 27, 1999 for Jere A. Drummond.

     11     Computation of Earnings Per Common Share.

     12     Computation of Ratio of Earnings to Fixed Charges.

     27     Financial Data Schedule as of September 30, 1999.



(b) Reports on Form 8-K:

 Date of Event             Subject


 July 20, 1999             BellSouth 2Q99 Earnings Release




<PAGE>



                                    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 and Controller
                       (Principal Accounting Officer)


November 9, 1999


<PAGE>


                                  EXHIBIT INDEX

     Exhibit
     Number

     10q-7 Amendment  dated  September  13,  1999  to  the  BellSouth
           Personal Retirement Account Pension Plan.

     10ee  Retirement Agreement dated October 27, 1999 for Jere A. Drummond.

     11    Computation of Earnings Per Common Share.

     12    Computation of Ratio of Earnings to Fixed Charges.

     27    Financial Data Schedule as of September 30, 1999.