03/08/2004

QSC: Strong growth and significantly improved profitability

• Preliminary results for 2003 and outlook for 2004
• Revenues up by 145 percent to EUR 115.6 million in 2003
• EBITDA breakeven point reached at year-end 2003
• Cash flow breakeven point anticipated during the first half of 2004

Cologne, March 8, 2004. According to preliminary results, QSC AG grew its revenues by 145 percent during the past fiscal year to EUR 115.6 million (2002: EUR 47.1 million). In the fourth quarter of 2003, the company generated revenues of EUR 30.3 million, compared to EUR 13.4 million for the same period the year before. This sharp rise was attributable, in particular, to strong growth in high-margin services to business and project customers, as well as to consolidation effects resulting from voice carrier Ventelo, which was acquired by QSC in late 2002. QSC was able to conclude Ventelo´s successful integration ahead of schedule by year-end 2003.
According to preliminary results, the annual EBITDA improved by 53 percent to EUR -28.5 million, as opposed to EUR -60.3 million in 2002. The preliminary EBITDA loss of EUR -5.8 million for the fourth quarter of 2003 was greatly reduced by 61 percent from the EUR -14.9 million EBITDA loss in the fourth quarter of 2002. The relocation of the Ventelo administration to Cologne ahead of schedule resulted in non-recurring expenses in the fourth quarter of 2003 for the move itself, for refurbishment obligations at the old location, for networking of systems and workplaces, as well as for consolidating the data and network control centers in Cologne. As a result, the preliminary annual EBITDA loss of EUR -28.5 million was higher than the EBITDA target of less than EUR -25 million that had been announced in August 2003, although it remained within the bandwidth of between EUR -25 and -30 million that had originally been planned in February 2003.
During the current fiscal year, QSC will benefit from the early termination of Ventelo´s long-term lease agreement and from the synergies stemming from this acquisition that were implemented during 2003. The company had already reached the EBITDA breakeven point by year-end 2003. Since then, QSC is generating a positive EBITDA.
The company plans to reach the positive cash flow threshold during the course of the first half of 2004. A sustained positive monthly cash flow is planned starting July 1, 2004, at the latest. On December 31, 2003, the company´s net cash and cash equivalents totaled EUR 54.3 million.
In 2004, QSC will benefit from sustained high demand from business customers for virtual private networks (VPNs) and, building upon that, for managed services, i.e. the outsourcing of all network management activities. The company is planning revenue growth of at least 20 percent for 2004 to more than EUR 138 million, as well as a sustained positive EBITDA for the year.

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 annual report of QSC AG is available starting the 30th of March 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 management´s 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.