11/12/2003

QSC on the verge of profitability; further expansion of large enterprise business

• Preliminary results for Q3 of 2003
  
• Revenues up by 144 percent
  
• EBITDA improved by 61 percent
  
• EBITDA breakeven point during Q4 of 2003
  

Cologne, November 12, 2003. According to preliminary results, Cologne-based QSC AG increased its revenues from EUR 12.1 million in the third quarter of 2002 to EUR 29.5 million in the third quarter of 2003. Although the company reduced its sales of low-margin products, in particular its sales from call-by-call telephony, QSC nevertheless succeeded in growing its revenues by 144 percent. In addition to the effect stemming from the consolidation of voice carrier Ventelo, which was acquired in late 2002, this repeated leap in revenues is mainly attributable to sustained strong growth in high-margin services to business and project customers. During the first nine months of the current fiscal year, revenues rose by 154 percent to EUR 85.3 million, as opposed to EUR 33.6 million during the comparable period in the year before.

The companys focus on large enterprise business customers played a major role in further improving its EBITDA. According to preliminary results, QSC succeeded in reducing its EBITDA loss by 61 percent to EUR -5.5 million in the third quarter of 2003 (Q3 2002: EUR -14.2 million). The companys EBITDA loss for the first nine months of the current fiscal year amounted to EUR -22.7 million, as opposed to
EUR -45.4 million for the comparable period in 2002.

For the tenth quarter in a row, QSC has significantly reduced its net cash outflow from its ongoing business: From EUR -8.6 million in the second quarter of 2003 to EUR -7.1 for the third quarter of 2003. Including the EUR 0.8 million tranche of the purchase price due for the Ventelo acquisition, this resulted in a total cash burn of EUR -7.9 for the third quarter. As of September 30, 2003, the companys cash and cash equivalents totaled EUR 60.2 million.

In spite of the persistently poor economy in Germany and anticipated high non-recurring expenses for the integration of Ventelo during the fourth quarter of 2003, QSC is confirming the significantly higher forecast it announced in August. The company expects achieving annual revenues of over EUR 115 million, as well as an annual EBITDA loss of less than EUR -25 million, and crossing into sustainably positive EBITDA territory during the course of the fourth quarter. QSC continues to plan on reaching the cash flow breakeven point during the first half of 2004.

Queries to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-009
E-Mail: invest@qsc.de

Notes :
The 9 months-report of QSC AG is available starting the 25th of November at www.qsc.de. This corporate news contains forward-looking statements pursuant to the US "Private Securities Litigation Act" of 1995. These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements. The assumptions that may involve material deviations due to unforeseeable developments include, but are not limited to, the demand for our products and services, the competitive situation, the development, dissemination and technical performance of DSL technology and its prices, the development and dissemination of alternative broadband technologies and their respective prices, changes in respect of telecommunications regulation, legislation and adjudication, prices and timely availability of essential third-party services and products, the timely development of additional marketable value-added services, the ability to maintain and enlarge upon marketing and distribution agreements and to conclude new marketing and distribution agreements, the ability to obtain additional financing in the event that managements planning targets are not attained, the punctual and full payment of outstanding debts by sales partners and resellers of QSC AG, and the availability of sufficient skilled personnel.