1


                 SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D. C. 20549


                                     FORM 10-Q
 (Mark One)

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

                   For the quarterly period ended March 31, 2000

                                        OR

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

                         For the transition period from    to


                           Commission file number 1-8607


                               BELLSOUTH CORPORATION
              (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 April 30, 2000, 1,881,533,029 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 .......................15

 3.       Qualitative and Quantitative Disclosures about Market Risk ..26

                                                    Part II
 6.       Exhibits and Reports on Form 8-K ............................27
<PAGE>

-------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
-------------------------------------------------------------------------------

                                   BELLSOUTH CORPORATION
                             CONSOLIDATED STATEMENTS OF INCOME
                                        (Unaudited)
                          (In Millions, Except Per Share Amounts)
<TABLE>
<CAPTION>
                                                      For the Three Months
                                                          Ended March 31,
                                                     1999               2000
<S>                                                 <C>               <C>
Operating Revenues:
   Wireline communications:
      Local service ............................    $2,654            $2,821
      Network access ...........................     1,191             1,263
      Long distance ............................       150               135
      Other wireline ...........................       280               285
        Total wireline communications ..........     4,275             4,504
   Domestic wireless ...........................       744               853
   International operations ....................       561               664
   Advertising and publishing ..................       343               364
   Other .......................................        50               102
      Total Operating Revenues..................     5,973             6,487

Operating Expenses:
   Operational and support expenses ............     3,253             3,568
   Depreciation and amortization ...............     1,113             1,218
   Severance accrual ...........................        --                78
     Total Operating Expenses ..................     4,366             4,864

Operating Income ...............................     1,607             1,623

Interest Expense ...............................       226               306
Net Earnings (Losses) of Equity Affiliates .....     (266)               131
Other Income, net ..............................        59                83

Income Before Income Taxes .....................     1,174             1,531
Provision for Income Taxes .....................       559               530

     Net Income ................................     $ 615            $1,001

Weighted-Average Common Shares
  Outstanding:
   Basic .......................................     1,932             1,881
   Diluted .....................................     1,951             1,898
Dividends Declared Per Common Share ............     $ .19             $ .19
Earnings Per Share:
   Basic .......................................     $ .32             $ .53
   Diluted .....................................     $ .32             $ .53
</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>

                                           December 31,         March 31,
                                               1999                2000
                                                               (Unaudited)
<S>                                           <C>                 <C>
ASSETS
Current Assets:
 Cash and cash equivalents ...........        $ 1,287             $ 1,154
 Temporary cash investments ..........            105                  28
 Accounts receivable, net of
    allowance for uncollectibles
    of $312 and $330 .................          5,177               4,971
 Material and supplies ...............            451                 443
 Other current assets ................            367                 524
   Total Current Assets ..............          7,387               7,120

Investments and Advances .............          6,097               6,710

Property, Plant and Equipment ........         61,009              62,073
Less: accumulated depreciation .......         36,378              37,139
   Property, Plant and Equipment, net          24,631              24,934

Deferred Charges and Other Assets ....          1,564               1,652
Intangible Assets, net ...............          3,774               3,939

Total Assets .........................        $43,453             $44,355

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
 Debt maturing within one year .......         $7,653              $5,484
 Accounts payable ....................          1,961               2,085
 Other current liabilities ...........          3,781               3,918
   Total Current Liabilities .........         13,395              11,487

Long-Term Debt .......................          9,113              10,880

Noncurrent Liabilities:
 Deferred income taxes ...............          2,705               2,844
 Unamortized investment tax credits ..            126                 116
 Other noncurrent liabilities  .......          3,299               3,331
   Total Noncurrent Liabilities ......          6,130               6,291

Shareholders' Equity:
 Common stock, $1 par value
   (4,400 shares authorized;
    1,883 and 1,880
    shares outstanding) ...................     2,020               2,020
 Paid-in capital ..........................     6,771               6,775
 Retained earnings ........................    11,456              12,078
 Accumulated other comprehensive income ...     (358)                (45)
 Shares held in trust and treasury ........   (4,798)             (4,892)
 Guarantee of ESOP debt....................     (276)               (239)
   Total Shareholders' Equity .............    14,815              15,697

Total Liabilities and Shareholders' Equity    $43,453             $44,355
</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 Three Months
                                                                                  Ended March 31,
                                                                              1999               2000
<S>                                                                         <C>               <C>
 Cash Flows from Operating Activities:
  Net income ............................................................  $ 615             $ 1,001
  Adjustments to net income:
      Depreciation and amortization .....................................  1,113               1,218
      Provision for uncollectibles  .....................................     84                  89
      Net losses (earnings) of equity affiliates ........................    266                (131)
      Dividends received from unconsolidated businesses..................     14                   9
      Minority interests in income of subsidiaries ......................     16                   2
      Deferred income taxes and unamortized investment tax credits ......    104                  (6)
      Severance Accrual..................................................     --                  78
  Net change in:
      Accounts receivable and other current assets ......................    (11)                  3
      Accounts payable and other current liabilities ....................   (308)                308
      Deferred charges and other assets .................................   (128)               (237)
      Other liabilities and deferred credits ............................   (129)                (34)
  Other reconciling items, net ..........................................      6                  50
      Net cash provided by operating activities .........................  1,642               2,350

 Cash Flows from Investing Activities:
  Capital expenditures .................................................. (1,387)             (1,563)
  Investments in and advances to unconsolidated businesses ..............    (55)                (26)
  Purchases of licenses and other intangible assets .....................    (38)                (69)
  Proceeds from disposition of short-term investments ...................    181                 137
  Purchases of short-term investments ...................................   (185)                (64)
  Proceeds from repayment of loans and advances..........................     15                  17
  Other investing activities, net .......................................     11                  12
      Net cash used for investing activities ............................ (1,458)             (1,556)

 Cash Flows from Financing Activities:
  Net borrowings (repayments) of short-term debt ........................    982              (2,201)
  Proceeds from long-term debt ..........................................      6               2,047
  Repayments of long-term debt ..........................................   (181)               (295)
  Dividends paid ........................................................   (371)               (358)
  Purchase of treasury shares ........................................... (1,841)               (140)
  Other financing activities, net .......................................     17                  20
      Net cash used for financing activities ............................ (1,388)               (927)

 Net Decrease in Cash and Cash Equivalents .............................. (1,204)               (133)
 Cash and Cash Equivalents at Beginning of Period .......................  3,143               1,287
 Cash and Cash Equivalents at End of Period .............................$ 1,939             $ 1,154

</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 Three Months Ended March 31, 2000

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

Balance at December 31, 1999 ..........  2,020      (138)    $2,020    $6,771    $11,456    $(358)    $(4,798)    $(276)     $14,815

Net income ............................                                            1,001                                       1,001

Other comprehensive income, net of tax:
  Foreign currency
    translation adjustments ...........                                                        32                                 32
  Net unrealized gains
    on securities .....................                                                       291                                291
  Minimum pension
    liability adjustment ..............                                                      (10)                               (10)

Total comprehensive income ............                                                                                        1,314

Dividends declared ....................                                            (357)                                       (357)

Share issuances for
  employee benefit plans ..............                1                            (22)                    46                    24

Purchase of treasury stock ............               (3)                                                (140)                 (140)

Tax benefit related to
  stock options .......................                                     4                                                      4

ESOP activities and related
  tax benefit .........................                                                                               37          37
                                           ------   --------  --------  --------  -------- ---------   --------    --------  -------
Balance at March 31, 2000 .............     2,020    (140)      $2,020   $6,775    $12,078    $ (45)   $(4,892)    $(239)    $15,697

</TABLE>

(a)......Trust  and treasury  shares are not  considered to be  outstanding  for
financial reporting purposes.  As of March 31, 2000, there were approximately 36
shares held in trust and 104 shares held in treasury.

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 Three Months Ended March 31, 1999

                                         ----------------------- ------------------------------------------------------------------
                                            Number of Shares                                   Amount
                                         ----------------------- ------------------------------------------------------------------
<S>                                         <C>          <C>       <C>       <C>       <C>      <C>       <C>        <C>      <C>
                                                                                               Accum.
                                                       Shares                                  Other     Shares     Guaran-
                                                       Held In                                Compre-   Held In     tee of
                                           Common     Trust and  Common    Paid-in  Retained  hensive  Trust and     ESOP
                                           Stock      Treasury    Stock    Capital  Earnings  Income    Treasury     Debt     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 ..............................                                               615                                      615

Other comprehensive income, net of tax:
  Foreign currency
    translation adjustments .............                                                      (158)                           (158)

Total comprehensive income ..............                                                                                        457

Dividends declared ......................                                             (369)                                    (369)

Share issuances for
  employee benefit plans ................                                              (10)                   20                  10

Purchase of treasury stock ..............                (43)                                            (1,841)             (1,841)

Purchase of stock by grantor trust ......                                                                    (4)                 (4)

ESOP activities and related
  tax benefit ...........................                                                3                             36        39
                                              ------     -------  -------- -------  --------  ------   ----------  -------  --------
Balance at March 31, 1999 ...............      2,020      (113)     $2,020  $6,766   $9,718   $(222)    $(3,577)    $(303)   $14,402

</TABLE>

(a)......Trust  and treasury  shares are not  considered to be  outstanding  for
financial reporting purposes.  As of March 31, 1999, there were approximately 36
shares held in trust and 77 shares held in treasury.


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

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

Note B - Recent Accounting Pronouncements

Revenue Recognition
In December 1999, the SEC issued Staff Accounting  Bulletin Number 101, "Revenue
Recognition in Financial Statements",  (SAB 101). SAB 101 requires that revenues
and costs of revenues  derived  from  services  rendered at the  beginning  of a
contract or business  relationship  be deferred and recognized  over the life of
the related contract or relationship.  The guidelines in SAB 101 must be adopted
during the second  quarter of 2000. We are  currently  assessing the impact that
adoption  of  these  guidelines  will  have on our  results  of  operations  and
financial position.

Derivative Instruments and Hedging Activities
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".  Among other provisions,  it requires that
entities  recognize  all  derivatives  as either  assets or  liabilities  in the
statement of financial  position and measure  those  instruments  at fair value.
Gains and losses resulting from changes in the fair values of those  derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge accounting.  The effective date of this standard was delayed
via the issuance of SFAS No. 137,  "Accounting  for Derivative  Instruments  and
Hedging  Activities - Deferral of the Effective Date of FASB Statement No. 133 -
an amendment of FASB Statement  133". The effective date for SFAS No. 133 is now
for fiscal years  beginning  after June 15,  2000,  though  earlier  adoption is
encouraged  and  retroactive  application  is  prohibited.  This  means that the
standard  must be adopted by us no later than January 1, 2001.  We do not expect
the  adoption  of this  standard  will  have a  material  impact on  results  of
operations, financial position or cash flows.

Note C - Earnings Per Share

Basic  earnings per share is computed on the  weighted-average  number of common
shares  outstanding  during each period.  Diluted earnings per share is based on
the  weighted-average  number of common shares  outstanding plus net incremental
shares arising out of employee stock options and benefit plans. The following is
a  reconciliation  of the  weighted-average  share amounts (in millions) used in
calculating earnings per share:

                                                   For the Three Months
                                                     Ended March 31,
                                                   1999           2000
Basic common shares outstanding ...........       1,932          1,881
Incremental shares from stock options .....          19             17
Diluted common shares outstanding .........       1,951          1,898

<PAGE>


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

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


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>
<CAPTION>

                                                 First Quarter           %
                                               1999         2000      Change
<S>                                           <C>          <C>          <C>
Wireline communications
External revenues ........................    $4,275       $4,504       5.4
Intersegment revenues ....................        48           72      50.0
  Total revenues .........................    $4,323       $4,576       5.9
Operating income .........................    $1,413       $1,552       9.8
Segment net income .......................    $  801       $  863       7.7

Domestic wireless
External revenues ........................     $ 744        $ 853      14.7
Intersegment revenues ....................        4            4         --
  Total revenues .........................     $ 748        $ 857      14.6
Operating income .........................     $  87        $  92       5.7
Net earnings (losses) of equity affiliates     $  31        $  32       3.2
Segment net income .......................     $  60        $  60        --

International operations
External revenues ........................     $ 561        $ 664      18.4
Intersegment revenues ....................        --           11       N/M*
  Total revenues .........................     $ 561        $ 675      20.3
Operating income .........................     $  51        $ (2)       N/M
Net earnings (losses) of equity affiliates     $ (13)       $  17       N/M
Segment net income (loss) ................     $ (20)       $  14       N/M

Advertising and publishing
External revenues ........................     $ 343        $ 364       6.1
Intersegment revenues ....................         3            5      66.7
  Total revenues .........................     $ 346        $ 369       6.6
Operating income .........................     $ 140        $ 145       3.6
Net earnings (losses) of equity affiliates     $ (1)        $ (1)        --
Segment net income .......................     $  84        $  90       7.1
</TABLE>



*  Not Meaningful
<PAGE>


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

Note D - Segment Information (continued)
<TABLE>
<CAPTION>

                                                   First Quarter           %
                                                 1999         2000      Change
Other
<S>                                              <C>          <C>         <C>
External revenues ............................. $  50       $  102        N/M
Intersegment revenues .........................    70           88       25.7
  Total revenues .............................. $ 120        $ 190       58.3
Operating loss ................................ $ (84)       $ (54)     (35.7)
Net earnings (losses) of equity affiliates..... $  1         $  --        N/M
Segment net loss .............................. $ (57)       $ (39)     (31.6)

Reconciling items
Intersegment revenues ......................... $ (125)     $ (180)      44.0
Operating income (loss) ....................... $  --       $ (110)       N/M
Net earnings (losses) of equity affiliates
   (Note F).................................... $ (284)       $ 83        N/M
Segment net income (loss)...................... $ (253)       $ 13        N/M
</TABLE>




Note E - Marketable Securities

We have investments in marketable securities, primarily common stocks, which are
accounted for under the cost method.  These investments are comprised  primarily
of a 10% equity interest in Qwest and are classified as available-for-sale under
SFAS 115.  Under SFAS 115,  available-for-sale  securities  are  required  to be
carried at their fair  value,  with  unrealized  gains and losses (net of income
taxes)  recorded  in  accumulated  other  comprehensive  income  (loss)  in  our
statement of changes in shareholders' equity and comprehensive  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 March 31, 2000:

                                           Gross        Gross
                                        Unrealized    Unrealized
                              Cost         gains        losses      Fair Value

Investment in Qwest  ....    $3,500        $ 55          $ --        $ 3,555
Other investments .......       208         212            --            420

    Total  ..............    $3,708       $ 267          $ --        $ 3,975

We held no significant investments in marketable securities at March 31, 1999.

<PAGE>










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

Note F - Devaluation of Brazilian Currency

In mid January  1999,  the  Brazilian  Government  changed its foreign  exchange
policy,  extinguishing  the exchange band through which it had managed the range
of the fluctuation of the Real in relation to the US Dollar, allowing the market
to freely determine the exchange rate. As a consequence of this change, the Real
devalued  significantly  in  relation  to the  US  Dollar  in  early  1999.  The
devaluation  and  subsequent  fluctuations  in the exchange rate resulted in our
Brazilian wireless  properties  recording net currency losses related to the net
US Dollar-denominated  liabilities. Our share of the foreign currency losses for
the first quarter of 1999 was $280.

Note G - Sublease of Communications Towers

In June 1999, we signed a definitive  agreement with Crown Castle  International
Corporation  (Crown) for the sublease of all unused space on approximately 1,850
of our  wireless  communications  towers  in  exchange  for $610 to be paid in a
combination of cash and Crown common stock.  As of March 31, 2000 we have closed
on 1,664 towers and received $548. Remaining towers covered by the agreement are
expected to be subleased  throughout the remainder of 2000. We also entered into
a five-year, build-to-suit agreement with Crown covering up to 500 towers.

Under a similar  agreement,  Crown will  sublease  all  unused  space on 773 PCS
towers in exchange for $317 in cash. As of March 31, 2000, we have closed on 674
towers and received $277. Remaining towers covered by the agreement are expected
to be subleased  throughout  the  remainder  of 2000.  In  connection  with this
agreement, we entered into an exclusive three-year, build-to-suit agreement.

Note H - Supplemental Cash Flow Information

                                       For the Three Months
                                          Ended March 31,
                                        1999            2000
Cash Paid For:

   Income taxes .................       $ 57             $111

   Interest .....................      $ 159             $204


Note I - 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.

                             For the Three Months
                                Ended March 31,          %
                               1999         2000       Change
Revenues  ................   $1,209       $1,515        25.3
Operating income .........     $ 29         $111         N/M

Net income (loss) ........    $(649)        $ 38         N/M

<PAGE>



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


Note J - Contingencies

Following the  enactment of the  Telecommunications  Act of 1996,  our telephone
company  subsidiary,  BellSouth  Telecommunications,  Inc.  (BST),  and  various
competitive  local  exchange  carriers  (CLECs)  entered  into   interconnection
agreements  providing  for,  among  other  things,  the  payment  of  reciprocal
compensation  for local calls initiated by the customers of one carrier that are
completed  on the  network of the other  carrier.  Numerous  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. BST has maintained 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 have,
in most cases, ruled that BST is responsible for paying reciprocal  compensation
on these calls. BST has appealed the adverse  decisions and continues to believe
that  it  has  a  good  legal  basis  for  its  position  that  such  reciprocal
compensation is not owed to the CLECs.  For those cases where BST believes it is
probable  that it has incurred a  liability,  it has recorded an estimate of the
amount owed.  At March 31,  2000,  the exposure  related to  unrecorded  amounts
withheld from CLECs was approximately $270, including accrued interest.

In March 2000, the United States Court of Appeals for the D.C.  Circuit  vacated
and  remanded  the FCC  decision,  concluding  that  the FCC had not  adequately
explained its finding that ISP traffic was interstate.  Based on statements made
by the FCC since the court's  decision,  we do not believe that this most recent
court  decision   adversely  affects  the  ultimate  outcome  of  pending  state
proceedings.  Nonetheless,  we have  commenced  discussions  with several  CLECs
concerning  settlement  of some  claims,  and  agreements  have been  reached in
certain circumstances.

Other reciprocal compensation issues

In  a  related  matter,  a  CLEC  was  claiming   terminating   compensation  of
approximately  $165 for service  arrangements  that we did not believe  involved
"traffic" under BST's interconnection agreements. BST filed a complaint with the
state regulatory  commission  asking that agency to declare that BST did not owe
reciprocal  compensation  for  these  arrangements.  In March  2000,  the  state
commission  ruled in BST's favor finding that  compensation  was not owed to the
CLEC.

Note K - Workforce Reduction

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

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

Note L - E-Plus Restructuring

In February  2000 we formed a joint  venture with KPN Royal Dutch  Telecom (KPN)
through which KPN owns a 77.5%  interest in E-Plus,  a German mobile  operator ,
and we own a 22.5%  interest.  We share  control of E-Plus  with KPN through our
ownership in the joint venture. We have the option, exercisable in July 2001, of
converting  our 22.5%  interest  in the joint  venture  into  either 100 million
shares  of KPN or  approximately  500  million  shares  of KPN  Mobile.  We also
received warrants to purchase approximately 46 million additional shares of KPN.
In conjunction with the restructuring,  we recognized  additional income of $68,
which is included in net earnings (losses) of equity  affiliates.

Note M - Debt Issuance

In  February  2000 we issued $2  billion of  long-term  debt,  consisting  of $1
billion  of  Ten-year,  7 3/4%  Notes  and $1  billion  of  Thirty-year,  7 7/8%
Debentures.  We  received  total  proceeds  of $1,974,  which was used to retire
commercial paper.

Note N - Tracking Stock

On March 29, 2000, we filed with the SEC a preliminary proxy statement  relating
to a  special  shareholders'  meeting  to  approve  amendments  to our  restated
articles of  incorporation.  The  amendments  will permit us to issue our common
stock in series,  of which our Board of Directors will initially  designate two:
BLS Group stock and Latin  America  Group stock.  Latin  America  Group stock is
intended  to  reflect  the  separate  performance  of the Latin  America  Group,
consisting  of our Latin  American  businesses.  BLS Group  stock is intended to
track the separate performance of the BLS Group,  consisting of all of our other
businesses  and the BLS Group's  ownership of the portion of the equity value of
the Latin America Group that is not sold or  distributed.  The  amendments  also
provide for each  outstanding  share of our existing  common stock to be changed
into one share of BLS Group  stock  immediately  before  the  completion  of our
planned initial public offering of Latin America Group stock.

Our  shareholders  will also be asked at the special meeting to adopt an amended
and restated stock plan. This stock plan would, among other things,  reflect the
tracking stock  proposal by  authorizing us to grant to our employees,  officers
and directors  awards based on shares of BLS Group stock and Latin America Group
stock.

At the  same  time  we  filed  our  preliminary  proxy  statement,  we  filed  a
registration  statement  pursuant  to  which we plan to  offer  shares  of Latin
America  Group stock that  represent a portion of the equity  value of the Latin
America  Group.  The Latin  America Group will use the proceeds from the initial
public offering to continue its expansion in Latin America and for other general
purposes.

We expect to distribute all of the shares representing the BLS Group's ownership
of the Latin  America  Group to the  holders  of BLS Group  stock  within six to
twelve months following the initial public offering. The decision to make such a
distribution  and the precise timing will depend on market  conditions and other
factors.  After full distribution of the Latin America Group stock, ownership in
BellSouth will then be represented by two stocks:  Latin America Group stock and
BLS Group stock.

Note O - Subsequent Events

Proposed Domestic Wireless Transaction
On April 4, 2000, we signed a definitive  agreement with SBC Communications Inc.
(SBC) to  create a  national  wireless  business  (Wireless  Co.)  comprised  of
substantially  all of both companies' US wireless assets.  The new joint venture
will serve  approximately 16.2 million subscribers and cover a geographical area
with  a  population  of 175  million.  Assuming  that  all  of  the  assets  are
contributed as provided for in the agreement,  Wireless Co. will be 40% owned by
BellSouth  and 60% owned by SBC.  We will share  joint and equal  control of the
venture.

The  joint  venture  will be a  separately  managed  company  capable  of making
acquisitions  and bidding on new or re-auctioned  wireless  frequencies.  It may
issue debt and stock to the public to generate additional cash to fund expansion
and  product  development   efforts.   The  agreement  is  subject  to  numerous
conditions,  including  regulatory  approvals,  and we expect the closing of the
venture to occur by the end of 2000.


<PAGE>

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

Note O - Subsequent Event (continued)

Investment in Brazil
On May 4, 2000,  we completed  the purchase of a  combination  of voting  common
stock and American Depository  Receipts (ADRs) representing  nonvoting preferred
stock of Tele Centro Oeste Celular  Participacoes SA (TCO), a Brazilian company,
for a total purchase price of approximately  $229. TCO holds the A Band cellular
concession in central-west  Brazil,  including  Brasilia,  as well as the B Band
cellular  concession  for  northern  Brazil  through its 95%  ownership in Norte
Brasil Telecom.  The common stock portion of our investment  represents 11.8% of
the voting power of TCO. The combined  investment in common and preferred  stock
represents  16.5% of the total capital of TCO. The investment  will be accounted
for under the cost method of accounting.


<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.

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

Key financial and operating data for first quarter 2000 and 1999 are as follows:

                                         ------------------------ ------------
                                              First Quarter            %
                                         ------------------------
                                              1999        2000        Change
                                         ----------- ------------ ------------
Revenues                                     $5,973       $6,487          8.6
---------------------------------------- ----------- ------------ ------------
Expenses                                     $4,366       $4,864         11.4
---------------------------------------- ----------- ------------ ------------
EBITDA(a)                                    $2,720       $2,919          7.3
---------------------------------------- ----------- ------------ ------------
EBITDA margin                                 45.5%        45.0%       -50bps
---------------------------------------- ----------- ------------ ------------
---------------------------------------- ----------- ------------ ------------
As Reported:
---------------------------------------- ----------- ------------ ------------
   Net income                                  $615       $1,001         62.8
---------------------------------------- ----------- ------------ ------------
   Earnings per share                          $.32         $.53         65.6
---------------------------------------- ----------- ------------ ------------
Normalized:
---------------------------------------- ----------- ------------ ------------
   Net income                                  $895         $981          9.6
---------------------------------------- ----------- ------------ ------------
   Earnings per share                          $.46         $.52         13.0
---------------------------------------- ----------- ------------ ------------

(a)......EBITDA  represents  income before net interest  expense,  income taxes,
depreciation  and  amortization,  severance  accrual,  net earnings  (losses) of
equity  affiliates  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
sperformance   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.

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

On a  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 volume 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 2000 exclude the impacts of:

     *    Income related to the  restructuring of our ownership  interest in the
          German wireless  operator,  E-Plus,  which increased net income by $68
          ($0.04 per share) (this gain is included in Net  Earnings  (Losses) of
          Equity   Affiliates)  (see  Note  L  to  the  consolidated   financial
          statements for further discussion of this matter); and

     *    Expense  recorded  as a result  of our  previously  announced  plan to
          reduce our domestic workforce,  which reduced net income by $48 ($0.03
          per share) (see Note K to the  consolidated  financial  statements for
          further discussion of this matter).

Normalized results for first quarter 1999 excludes the impact of the devaluation
of the Brazilian Real. Our share of the foreign currency losses in our Brazilian
wireless  properties  reduced net income by $280 ($0.14 per share) (this loss is
included in Net Earnings (Losses) of Equity Affiliates).
<PAGE>

-------------------------------------------------------------------------------
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 Earnings (Losses) of Equity Affiliates line
item.

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

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

                                           First Quarter           %
                                      ------------------------
                                         1999        2000        Change
------------------------------------------------- ------------ -----------

Results of Operations
Operating revenues:
   Local service                          $2,654       $2,821         6.3
   Network access                          1,191        1,263         6.0
   Long distance                             150          135       (10.0)
   Other wireline                            280          285         1.8
   Intersegment revenues                      48           72        50.0
------------------------------------------------- ------------ -----------
       Total operating revenues           $4,323       $4,576         5.9
------------------------------------------------- ------------ -----------
Operating expenses                        $2,910       $3,024         3.9
------------------------------------------------- ------------ -----------
Operating income                          $1,413       $1,552         9.8
------------------------------------------------- ------------ -----------
Segment net income                         $ 801        $ 863         7.7
------------------------------------------------- ------------ -----------

------------------------------------------------- ------------ -----------
EBITDA                                    $2,246       $2,433         8.3
------------------------------------------------- ------------ -----------
EBITDA margin                              52.0%        53.2%     +120bps
------------------------------------------------- ------------ -----------

------------------------------------------------- ------------ -----------
Key Indicators
------------------------------------------------- ------------ -----------
Access line counts (000s):
------------------------------------------------- ------------ -----------
   Switched access lines:
------------------------------------------------- ------------ -----------
      Residential                         16,764       17,234         2.8
------------------------------------------------- ------------ -----------
      Business                             7,325        7,230       (1.3)
------------------------------------------------- ------------ -----------
      Other                                  272          262       (3.7)
------------------------------------------------- ------------ -----------
   Total switched access lines            24,361       24,726         1.5
------------------------------------------------- ------------ -----------
    Access line equivalents (a)           14,586       20,917        43.4
------------------------------------------------- ------------ -----------
      Total equivalent access lines       38,947       45,643        17.2
------------------------------------------------- ------------ -----------
Access minutes of use (millions)          26,825       28,716         7.0
------------------------------------------------- ------------ -----------

------------------------------------------------- ------------ -----------
Long distance messages (millions)            177          136      (23.2)
------------------------------------------------- ------------ -----------
Digital and data services revenues         $ 597        $ 767        28.5
------------------------------------------------- ------------ -----------
Convenience feature revenues               $ 444        $ 515        16.0
------------------------------------------------- ------------ -----------

(a) Access line equivalents represent a conversion of non-switched data circuits
to a switched  access line basis and is presented  for  comparability  purposes.
Equivalents are calculated by converting data circuits (ISDN, ADSL, DS0, DS1 and
DS3) and  SONET-based  (optical)  services (OC3 to OC48) to the  equivalent of a
switched access line based on transport  capacity.  While the revenues generated
by access line  equivalents have a directional  relationship  with these counts,
growth rates cannot be compared on an equivalent basis.

Operating Revenues

Local service
The $167  increase  in local  service  revenues  is  attributable  to  growth in
switched  access  lines and strong  demand for  digital  and data  services  and
convenience features.

We ended the first quarter with over 45 million total  equivalent  access lines,
an increase of 17.2% since March 31, 1999. Residential access lines rose 2.8% to
17,234,000, driven by economic growth in our nine-state region as well as demand
for  secondary  residence  lines  which  accounted  for  47.9% of the  growth in
residential access lines. We added 225,000 secondary residence lines since March
31, 1999,  extending  the total to over 2.5 million lines and ending the current
period with a penetration rate of 17.1%.  Business access lines,  including both
switched  access  lines and data  circuits,  grew 28.5%  propelled  by expanding
demand  for our  digital  and data  services.  Switched  business  access  lines
decreased  1.3%  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
$71 (16.0%) when compared to first quarter 1999.  These increases were driven by
growth in 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 $49 compared to first quarter 1999.

Network access
Network  access  revenues  grew $72 in the first  quarter  due largely to higher
demand.  Access minutes of use rose 7.0% to 28,716 million in first quarter 2000
from 26,825  million in first quarter 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.  First quarter 2000 growth in minutes
was also  positively  impacted by the additional day of activity  resulting from
the leap year.

The growth rate in total minutes of use  continues to be negatively  impacted by
the trend of business customers migrating from traditional  switched circuits to
higher  capacity data line offerings  which are  fixed-charge  based rather than
per-minute-of-use  based.  Revenues from these dedicated  circuit  services grew
approximately  $59  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 $65  compared  to first  quarter  1999.  These rate  reductions  are
primarily related to the FCC's access reform and productivity factor adjustment.
The reductions were partially  offset by recoveries of local number  portability
costs.

Long distance
The $15 decrease is primarily  attributable to a 23.2% decrease in long distance
message  volumes since first quarter 1999. The decrease was offset by the impact
in 1999 of a  regulatory  ruling  related to  compensation  we receive from long
distance carriers for  interconnection to our public payphones.  Also offsetting
the  decreases  were  increased  revenues from the provision of digital and data
services.

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.  We believe that competition in the
intraLATA long distance  market will continue to adversely  impact long distance
message volumes and revenues.

Other wireline and intersegment revenues
Other wireline and  intersegment  revenues  increased  8.8%,  from $328 in first
quarter  1999 to $357 in first  quarter  2000.  Higher  revenues  from resale of
paging products and services,  sales of unbundled network elements,  collocation
of  competing  carriers'  equipment in our  facilities,  demand for our Internet
access offering and interconnection  charges to wireless carriers were offset by
decreases in revenues from sales of customer  premises  equipment.  At March 31,
2000 we had 735,000  subscribers  to our  BellSouth  Internet  Service  (sm), an
increase of 56.7% compared to the same 1999 period. The increase in intersegment
revenues  primarily  represents  increased  business  activity  with  our  other
operating segments.

Operating Expenses

Operational and support expenses
Operational  and support  expenses  increased  $66 (3.2%) for first quarter 2000
when  compared to the first  quarter  1999.  The  increase was  attributable  to
accruals  related  to  reciprocal  compensation,   volume-related  increases  in
interconnection  expense and higher  payments to FCC mandated  universal  access
funds. These increases were offset by reductions in contract service expense and
volume-driven  costs from sales of CPE and paging equipment.  The increases were
further  offset by lower  pension and benefit  costs  attributable  to favorable
pension plan investment returns.

Also contributing to the increase 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. We have made ADSL service  available in 31 markets with
an addressable  market of  approximately 8 million access lines,  and we plan to
increase the addressable market to 11.5 million access lines by the end of 2000.
In January 2000, we began offering a  self-install  kit for ADSL in seven cities
and announced a  partnership  with Darwin  Networks to expand ADSL  offerings to
additional  areas in the  southeastern  US. We are deploying IFITL in nearly all
newly built  neighborhoods and are also retrofitting some 200,000 existing homes
in Atlanta and Miami.

Depreciation and amortization
Depreciation  and  amortization  expense  increased $48 (5.8%) for first quarter
2000.  The increase is primarily  attributable  to  amortization  of capitalized
internally  developed software and depreciation  resulting from higher levels of
net property, plant and equipment.

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

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


                                               First Quarter           %
                                           -----------------------
                                              1999        2000        Change
----------------------------------------------------- ------------ -----------

----------------------------------------------------- ------------ -----------
External revenues                              $ 744        $ 853        14.7
----------------------------------------------------- ------------ -----------
Intersegment revenues                              4            4          --
----------------------------------------------------- ------------ -----------
     Total operating revenues                  $ 748        $ 857        14.6
----------------------------------------------------- ------------ -----------
Operating expenses                             $ 661        $ 765        15.7
----------------------------------------------------- ------------ -----------
Operating income                                $ 87         $ 92         5.7
----------------------------------------------------- ------------ -----------
Net earnings (losses) of equity affiliates      $ 31         $ 32         3.2
----------------------------------------------------- ------------ -----------
Segment net income                              $ 60         $ 60          --
----------------------------------------------------- ------------ -----------

----------------------------------------------------- ------------ -----------
EBITDA                                         $ 225        $ 250        11.1
----------------------------------------------------- ------------ -----------
EBITDA margin                                  30.1%        29.2%      -90bps
----------------------------------------------------- ------------ -----------

----------------------------------------------------- ------------ -----------
Customers (a)                                  4,486        5,196        15.8
----------------------------------------------------- ------------ -----------
Average monthly revenue per customer (a)         $51          $51          --
----------------------------------------------------- ------------ -----------

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

Operating Revenues

Total  operating  revenues grew $109 or 14.6%  compared to the same 1999 period,
which is attributable to higher  airtime,  access,  and equipment sales revenues
driven  by a 15.8%  increase  in the  customer  base.  Adjusted  for the sale of
Honolulu  Cellular  in August  1999,  the  customer  growth rate would have been
19.1%.  Advertising,  enhanced  volume pricing  strategies  (including  one-rate
plans, 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 10 new  markets  in the  southeastern  US over the past  twelve
months.  Average monthly usage by customers increased during first quarter 2000,
and,  when  combined with the increase in total  customers,  drove  increases in
total minutes of use. Average monthly revenue per customer  remained  relatively
flat, due primarily to declines in per-minute  rates in response to competition.
The  declines in average  per-minute  rates  occurred as we expanded our product
offering and further penetrated lower-usage market segments, and we expect rates
to continue  decreasing as more  customers opt for our one-rate  plans and other
bundled - minute packages.

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

Operating Expenses

Operational and support expenses
Operational  and support  expenses  increased  $84 or 16.1% during first quarter
2000 due to higher customer  acquisition costs,  higher network costs associated
with  network  usage,  and costs  related to new customer  promotions.  Customer
acquisition  costs  increased  as a  result  of a  34.3%  increase  in  customer
additions  from first quarter 1999 to first quarter 2000.  Network usage and the
related  expense have  increased  as a result of customer  and volume  growth in
established  markets and the  initiation  of service in 10 PCS markets  over the
past 12 months.

Our customer base continues to migrate from analog to digital  service.  We have
moved 75% of our subscriber  base to digital and have increased  digital minutes
of use to 75% of total network usage.  Digital technology offers many advantages
over analog  technology,  including a three-fold gain in channel  capacity,  the
ability to provide advanced services and functionality and greater security.

Depreciation and amortization
Depreciation and amortization increased $20 (14.5%) to $158 during first quarter
2000.  The increase was  primarily  attributable  to the  additions of property,
plant and  equipment  since  March 31,  1999.  These  additions  were  primarily
attributable  to the  build-out  of PCS  markets  and  expansion  of the network
related to growth in the customer  base.  The increase is also  attributable  to
accelerated  depreciation on network equipment that is being replaced over an 18
month period from June 1999 through December 2000.

Net Earnings (Losses) of Equity Affiliates

Compared  to  first   quarter  1999,   2000  equity  in  earnings   (losses)  of
unconsolidated  domestic wireless  businesses  remained  relatively flat. Higher
earnings at our  business in Los Angeles were offset by decreases in earnings at
other properties.

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

International operations is comprised principally of our investments in cellular
and PCS  businesses  in ten  countries  in Latin  America as well as in Denmark,
Germany,  India and Israel.  Consolidated  operations  include our businesses in
Argentina,  Chile, Ecuador,  Nicaragua, Peru and Venezuela. All other businesses
are accounted for under the equity  method,  and  accordingly  their results are
reported as Net earnings (losses) of equity affiliates.

                                               First Quarter          %
                                            ---------------------
                                             1999       2000        Change
---------------------------------------------------- ------------ -----------

---------------------------------------------------- ------------ -----------
External revenues                             $ 561        $ 664        18.4
---------------------------------------------------- ------------ -----------
Intersegment revenues                            --           11        N/M*
---------------------------------------------------- ------------ -----------
      Total operating revenues                $ 561        $ 675        20.3
---------------------------------------------------- ------------ -----------
Operating expenses                            $ 510        $ 677        32.7
---------------------------------------------------- ------------ -----------
Operating income                               $ 51         $(2)         N/M
---------------------------------------------------- ------------ -----------
Net earnings (losses) of equity affiliates    $(13)         $ 17         N/M
---------------------------------------------------- ------------ -----------
Segment net income (loss)                     $(20)         $ 14         N/M
---------------------------------------------------- ------------ -----------

---------------------------------------------------- ------------ -----------
EBITDA                                        $ 154        $ 122      (20.8)
---------------------------------------------------- ------------ -----------
EBITDA margin                                 27.5%        18.1%     -940bps
---------------------------------------------------- ------------ -----------

---------------------------------------------------- ------------ -----------
Customers (a)                                 2,949        5,096        72.8
---------------------------------------------------- ------------ -----------
Average monthly revenue per customer (a)       $ 61         $ 39      (36.1)
---------------------------------------------------- ------------ -----------
* Not Meaningful

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


Operating Revenues

The  increase of $114 is  primarily  due to  substantial  growth in the customer
bases of our consolidated operations, which collectively have grown almost 72.8%
since March 31, 1999.  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 and  competitive  pressures in certain  countries.  We now offer prepaid
cellular  products to all of the  countries we serve in Latin  America.  Overall
weakening of local currencies also impacted revenue growth on a US Dollar basis.
The  current  period  also  includes  $10 of  revenues  from our  operations  in
Nicaragua that was consolidated for the first time in first quarter 2000.

Operating Expenses

Operational and support expenses
For first quarter 2000, these expenses  increased $146 compared to first quarter
1999.  This  increase  is  primarily  the  result of  operational  and  customer
acquisition  costs  associated  with  growth in  customer  levels  and  expanded
operations.  Since March 31, 1999, our existing operations have added almost 2.0
million customers in Argentina,  Chile and Venezuela. We have also added 182,000
customers  through the  acquisition  and  development  of businesses in Ecuador,
Nicaragua and Peru.

Depreciation and amortization
Depreciation  expense  increased $19 due  primarily to higher gross  depreciable
plant  resulting  from  the  continued   investment  in  our  wireless   network
infrastructure.  Amortization  expense  increased  $2 as a result  of  growth in
intangibles related to our purchase of additional ownership interests in several
Latin American operations.

Net Earnings (Losses) of Equity Affiliates

Net earnings  (losses) from our equity  affiliates  improved $30 to $17 in first
quarter 2000. The improvement in our unconsolidated  international businesses is
due to stronger  results from our  investments  in Brazil and  Germany.  Both of
these  businesses  experienced  substantial  growth in their customer bases. Net
earnings (losses) of equity affiliates for the international  operations segment
for 2000 excludes $68 in income  related to the  restructuring  of our ownership
interest  in our  German  wireless  operations  (see Note L to the  consolidated
financial  statements  for further  discussion  of this  matter).  Net  earnings
(losses) of equity affiliates for the international  operations segment for 1999
exclude  $280 in  foreign  currency  losses  related to the  devaluation  of the
Brazilian  Real  in  January  1999  (see  Note F to the  consolidated  financial
statements  for  further  discussion  of this  matter).  The  impact of  foreign
currency fluctuations in Brazil for first quarter 2000 was not significant.


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

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

                                               First Quarter           %
                                           -----------------------
                                             1999        2000        Change
----------------------------------------------------- ------------ -----------

----------------------------------------------------- ------------ -----------
External revenues                               $343         $364         6.1
----------------------------------------------------- ------------ -----------
Intersegment revenues                              3            5        66.7
----------------------------------------------------- ------------ -----------
Total operating revenues                        $346         $369         6.6
----------------------------------------------------- ------------ -----------
Operating expenses                              $206         $224         8.7
----------------------------------------------------- ------------ -----------
Operating income                                $140         $145         3.6
----------------------------------------------------- ------------ -----------
Net earnings (losses) of equity affiliates     $ (1)        $ (1)          --
----------------------------------------------------- ------------ -----------
Segment net income                               $84          $90         7.1
----------------------------------------------------- ------------ -----------

----------------------------------------------------- ------------ -----------
EBITDA                                          $146         $155         6.2
----------------------------------------------------- ------------ -----------
EBITDA margin                                  42.2%        42.0%      -20bps
----------------------------------------------------- ------------ -----------

Operating Results

External revenues increased $21 for first quarter 2000,  principally as a result
of revenues from our new directory publishing operations in Peru and Brazil. The
growth is also attributable to volume growth and price increases in the domestic
operations,  offset by the effects of shifts in directory production  schedules.
Adjusted  for book  shifts,  external  revenues  for  this  segment  would  have
increased by  approximately  10.6% for the  quarter.  Also  contributing  to the
increase are the revenues from our electronic media offerings.

Operational  and support  expenses  increased $14 for first  quarter  2000,  due
primarily  to our new  operations  in Peru and costs  associated  with growth in
electronic  media  offerings.  These increases were offset by lower costs in the
domestic  directory   businesses  due  to  the  shift  in  directory  production
schedules.  Depreciation  and  amortization  increased  by $4  due  to  the  new
international publishing operations.

Net  earnings  (losses)  of  equity  affiliates  includes  the  results  of  our
investment in a Brazilian directory publisher.


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

This  segment  is  primarily  comprised  of 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.

                                                  First Quarter             %
                                              ---------------------
                                                1999        2000        Change
----------------------------------------------------- ----------- --------------

----------------------------------------------------- ----------- --------------
External revenues                               $ 50        $102            N/M
----------------------------------------------------- ----------- --------------
Intersegment revenues                             70          88           25.7
----------------------------------------------------- ----------- --------------
Total operating revenues                       $ 120       $ 190           58.3
----------------------------------------------------- ----------- --------------
----------------------------------------------------- ----------- --------------
Operating expenses                             $ 204       $ 244           19.6
----------------------------------------------------- ----------- --------------
Operating loss                                 $(84)       $(54)          (35.7)
----------------------------------------------------- ----------- --------------
Net earnings (losses) of equity affiliates      $ 1        $ --             N/M
----------------------------------------------------- ----------- --------------
Segment net loss                               $(57)       $(39)          (31.6)
----------------------------------------------------- ----------- --------------

----------------------------------------------------- ----------- --------------
EBITDA                                         $(53)       $(24)          (54.7)
----------------------------------------------------- ----------- --------------
EBITDA margin                                (44.2%)     (12.6%)            N/M
----------------------------------------------------- ----------- --------------

Operating Results

External  revenues  increased  $52 for first  quarter  2000  driven by growth in
revenues from the resale of interLATA long distance  services in markets outside
of our wireline  region,  interactive  paging  services and wireless  television
offerings.

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



                                                First Quarter             %
                                            -----------------------
                                              1999        2000         Change
--------------------------------------------------- ------------ --------------

--------------------------------------------------- ------------ --------------
Interest Expense                              $226         $306           35.4
--------------------------------------------------- ------------ --------------
--------------------------------------------------- ------------ --------------
Net Earnings (Losses) of Equity Affiliates   (266)          131            N/M
--------------------------------------------------- ------------ --------------
--------------------------------------------------- ------------ --------------
Other Income, net                               59           83           40.7
--------------------------------------------------- ------------ --------------
--------------------------------------------------- ------------ --------------
Provision for Income Taxes                     559          530          (5.2)
--------------------------------------------------- ------------ --------------
--------------------------------------------------- ------------ --------------
Effective Tax Rate                           47.6%        34.6%      -1,300bps
--------------------------------------------------- ------------ --------------


Interest expense
Higher interest  expense in 2000 is attributable to higher average debt balances
resulting  from  borrowings  associated  with the financing of our investment in
Qwest and  increases  in interest  rates.  Our  average  debt  balances  were as
follows:


                                           First Quarter            %
                                        --------------------
                                        1999        2000         Change
------------------------------------------------ ----------- ------------

------------------------------------------------ ----------- ------------
Average short-term debt balance         $ 4,203     $ 6,817         62.2
------------------------------------------------ ----------- ------------
Average long-term debt balance          $ 8,572     $ 9,909         15.6
------------------------------------------------ ----------- ------------
------------------------------------------------ ----------- ------------
 Total average debt balance             $12,775     $16,726         30.9
------------------------------------------------ ----------- ------------

Net earnings (losses) of equity affiliates
Earnings from our unconsolidated businesses increased $397 in first quarter 2000
compared to first quarter 1999. First quarter 2000 results include $68 in income
related to the  restructuring  of our ownership  interest in our German wireless
operations  (see Note L to the  consolidated  financial  statements  for further
discussion of this matter).  First quarter 1999 includes foreign exchange losses
of $280  related to our  Brazilian  properties  (see Note F to the  consolidated
financial  statements  for further  discussion  of this  matter).  Excluding the
impact of these items,  first quarter 2000 earnings  increased $49 when compared
to first quarter 1999.  These results are addressed in the  discussions  for the
Domestic wireless, International operations and Other 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
increase of $24 is attributable  to higher  minority  interest income related to
our  less-than-100-percent  owned  subsidiaries  and increased  foreign currency
gains primarily in Chile. These decreases were partially offset by a decrease in
interest income.

Provision for income taxes
The provision for income taxes  decreased $29. The decrease in the effective tax
rate is due  primarily  to  more  favorable  results  at  foreign  equity-method
subsidiaries  which are recorded net of tax benefits or expense.  First  quarter
2000  results  were  favorably  impacted  by  additional  income  related to the
restructuring  of our  ownership  in E-Plus.  First  quarter  1999  results were
unfavorably  impacted by foreign currency losses recorded at our  unconsolidated
Brazilian  businesses.  Excluding these items,  our effective rate was 36.3% for
first quarter 2000 and 38.4% for first quarter 1999.

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

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

Net cash provided by (used for):
------------------------------------------------------------------------
                         1999         2000              Change
                      --------------------------------------------------

Operating activities..  $1,642       $2,350       $708         43.1%
Investing activities.. $(1,458)     $(1,556)      $(98)         6.7%
Financing activities.. $(1,388)      $(927)       $461        (33.2)%

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

Net cash provided by operating activities
The increase in cash from  operations  primarily  reflects  decreases in working
capital  requirements  and  higher  EBITDA.  Operating  cash flows for 2000 also
include $31 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 2000.

Net cash used in investing activities
During the first  three  months of 2000,  we invested  $1.6  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 first quarter 2000 are approximately $155 in
costs related to the purchase and development of internal-use software.

Net cash used in financing activities
During first quarter 2000, we issued $2 billion of long-term  debt. The proceeds
of $1,974 from this issuance were used to retire commercial paper borrowings.

Our debt to total  capitalization  ratio was 51.0% at March 31, 2000 compared to
53.1% at  December  31,  1999.  The  decrease  is a  function  of  increases  in
shareholders'  equity, driven by income from operations and net unrealized gains
on securities.

At May 3, 2000, we had shelf registration  statements on file with the SEC under
which $2.7 billion of debt securities could be publicly offered.

Market Risk

For a complete  discussion of our market risks,  you should refer to the caption
"Market  Risk" in our 1999 Annual Report on Form 10-K.  Our primary  exposure to
market risks  relates to  unfavorable  movements  in interest  rates and foreign
currency  exchange rates.  We do not anticipate any  significant  changes in our
objectives and strategies with respect to managing such exposures.

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

Regulatory Developments

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

Federal  policies  being  implemented by the Federal  Communications  Commission
(FCC)  strongly favor access  reform,  whereby the historical  subsidy for local
service  that is  contained  in network  access  charges  paid by long  distance
carriers  is  eliminated.  Unless  compensatory  changes  are  adopted,  such as
Universal Service Fund contribution  mandates, our revenues from this source are
at risk. In addition,  other aspects of access charge  regulation  and Universal
Service Fund  contribution  requirements  that are  applicable  to local service
carriers  such as BST are also under  consideration  and could result in greater
expense levels or reduced revenues.

During first  quarter  2000, a coalition of local and long  distance  providers,
including  BellSouth,  Bell  Atlantic,  GTE,  SBC,  AT&T and Sprint  submitted a
proposal  designed to result in lower consumer prices for long distance  service
by  reforming  the way in which access  costs are  recovered.  The proposal is a
comprehensive  package that would adjust the FCC's price cap,  access charge and
universal  service rules for those price cap local exchange carriers electing to
adopt the  proposal.  The FCC  asked for and  received  public  comment  on this
proposal and is expected to reach a decision by midyear.  If this  proposal were
approved, rates for access charges, and the revenues which we derive from access
charges, would be reduced.

The FCC has considerable  authority to establish  pricing,  interconnection  and
other policies that had once been considered  within the exclusive  jurisdiction
of the state public  service  commissions.  We expect the FCC to accelerate  the
growth of local service competition by aggressively utilizing such power.

We have petitioned the FCC for permission  under the 1996 Act to offer full long
distance  services in South  Carolina  and  Louisiana.  The FCC has denied these
petitions.  We have been testing our operations  support  systems in Georgia and
expect to file with the FCC during the second quarter of 2000. We do not know if
the FCC will require further changes in our  interconnection and network element
offerings and operations  support systems before it will approve such petitions.
These changes could result in significant  additional expenses and promote local
service  competition.  In December  1999,  the FCC granted the first approval to
another Baby Bell to provide in-region interLATA service.

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

In North Carolina, we reached a joint stipulation with the North Carolina Public
Staff and AT&T regarding revisions to the price regulation plan, switched access
reductions,  ADSL  deployment  and service  quality  issues.  The North Carolina
Utilities Commission conducted a hearing in late April on the Joint Stipulation,
and a decision by that commission on approval of the stipulation is pending.

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

International Operations

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

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

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

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

New Accounting Pronouncements

Revenue Recognition
In December 1999, the SEC issued Staff Accounting  Bulletin Number 101, "Revenue
Recognition in Financial Statements",  (SAB 101). SAB 101 requires that revenues
and costs of revenues  derived  from  services  rendered at the  beginning  of a
contract or business  relationship  be deferred and recognized  over the life of
the related contract or relationship.  The guidelines in SAB 101 must be adopted
during the second  quarter  2000.  We are  currently  assessing  the impact that
adoption  of  these  guidelines  will  have on our  results  of  operations  and
financial position.

Derivative Instruments and Hedging Activities
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".  Among other provisions,  it requires that
entities  recognize  all  derivatives  as either  assets or  liabilities  in the
statement of financial  position and measure  those  instruments  at fair value.
Gains and losses resulting from changes in the fair values of those  derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge accounting.  The effective date of this standard was delayed
via the issuance of SFAS No. 137,  "Accounting  for Derivative  Instruments  and
Hedging  Activities - Deferral of the Effective Date of FASB Statement No. 133 -
an amendment of FASB Statement  133". The effective date for SFAS No. 133 is now
for fiscal years  beginning  after June 15,  2000,  though  earlier  adoption is
encouraged  and  retroactive  application  is  prohibited.  This  means that the
standard  must be adopted by us no later that January 1, 2001.  We do not expect
that the  adoption of this  standard  will have a material  impact on results of
operations, financial position or cash flows.

Item 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

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

-------------------------------------------------------------------------------
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,  financial  position  and cash flows.
These  statements are based on our  assumptions and estimates and are subject to
risks and  uncertainties.  For these statements,  we claim the protection of the
safe harbor for  forward-looking  statements  provided by the Private Securities
Litigation Reform Act of 1995.

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

     *    a change in economic  conditions in domestic or international  markets
          where we operate or have  material  investments,  which  would  affect
          demand for our services;  - the intensity of competitive  activity and
          its resulting impact on pricing strategies and new product offerings;

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

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

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

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

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,  and we do not intend, to
publicly  release  the  results  of  any  revisions  to  these   forward-looking
statements to reflect events or circumstances after the date of this filing.


-------------------------------------------------------------------------------
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.

     11           Computation of Earnings Per Common Share.

     12           Computation of Ratio of Earnings to Fixed Charges.

     27           Financial Data Schedule as of March 31, 2000.



(b) Reports on Form 8-K:

 Date of Event             Subject

January 24, 2000        BellSouth 4Q99 Earnings Release

February 4, 2000        Organizational Announcement regarding domestic workforce
                        reduction; February 8, 2000 Analyst Meeting Comments

February 14, 2000       Form of Note and Debenture




<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/  Ronald M. Dykes
                                                          RONALD M. DYKES
                                                  Chief Financial Officer
                                           (Principal Accounting Officer)


May 5, 2000
<PAGE>


                                        EXHIBIT INDEX

     Exhibit
     Number

     11           Computation of Earnings Per Common Share.

     12           Computation of Ratio of Earnings to Fixed Charges.

     27           Financial Data Schedule as of March 31, 2000.