Corporate governance encompasses the internal policies and practices by which BellSouth is operated and controlled on behalf of its shareholders. The advantages of sound corporate governance include having a strong Board of Directors that is accountable to the Company and its owners. A good system of corporate governance also helps BellSouth maintain the confidence of investors, which allows the Company to raise capital efficiently.

The business affairs of BellSouth are conducted under the direction of the Board of Directors in accordance with the Georgia Business Corporation Code, as implemented by the Company's Articles of Incorporation and By-laws. The role of the Board of Directors is to effectively govern the affairs of the Company for the benefit of its shareholders and, to the extent appropriate under Georgia law, other constituencies, which include the Company's employees, customers, suppliers, and the communities in which it does business. The Board strives to ensure the success and continuity of the Company's business through the election of qualified management. It is also responsible for ensuring that the Company's activities are conducted in a responsible and ethical manner.

BellSouth has a diverse Board that we believe is one of the strongest and most independent in corporate America. BellSouth Chief Executive Officer Duane Ackerman and President and Chief Operating Officer Mark Feidler are the only Directors who are BellSouth employees. Our Board includes nine current or retired CEOs, including five from Fortune 200 companies. Distinguished by a depth of experience in a wide variety of challenging industries and professions, the Board has valuable expertise in banking, economics, the law, real estate, insurance and other fields critical to the effective governance and management of a multi-billion dollar enterprise.

• The Board adopted BellSouth's corporate governance principles in 2000.
• Committee assignments are based on the skills and expertise of the individual Director and the needs of the business.
• The Board meets regularly without members of management present.
• Directors have access to members of the Company's management team.

• Since BellSouth's incorporation in 1983, a majority of the members of BellSouth's Board have been independent, non-management Directors.
• Nine of the eleven Board members are independent, non-management Directors.
• BellSouth Chief Executive Officer Duane Ackerman and President and Chief Operating Officer Mark Feidler are the only Directors who are employees of the Company.

• Since incorporation, BellSouth has had an Audit Committee and a Compensation Committee composed of independent, non-management Directors.
• The Audit Committee has had a long-standing practice of meeting privately with representatives of the independent accountant, the Chief Corporate Auditor, and other members of management.
• The Compensation Committee evaluates the Chief Executive Officer's performance and determines and approves his compensation. The Committee also oversees succession planning.
• The Committee on Directors and Corporate Governance, which was created in 1998, oversees the Company's corporate governance principles, Board member selection and committee assignments, and Board compensation. It also conducts the annual Board and Committee performance evaluations.

• Since its first quarterly earnings release in 1984, BellSouth has practiced full and timely public disclosure of material information.
• BellSouth uses Generally Accepted Accounting Principles (GAAP) as the primary method for reporting results in its quarterly earnings releases.
• Detailed "road maps" reconciling GAAP reporting to normalized results are provided in quarterly earnings disclosures and posted on our website at www.bellsouth.com/investor.
• In 2002, the Chief Executive Officer and Chief Financial Officer began certifying all quarterly and annual financial reports filed with the Securities and Exchange Commission.

• A comprehensive Code of Conduct has been in place since BellSouth incorporated in 1983.
• A confidential telephone hotline for anonymous reporting of complaints and concerns was established in 1991.