11/03/2004

QSC sustains its strong and profitable growth

• Preliminary results for the third quarter of 2004
• Revenues rise by 29 percent
• EUR 0.4 million positive EBITDA
• Liquid assets grow to EUR 39.7 million
• QSC reiterates forecast

Cologne, November 3, 2004. According to preliminary results, Cologne-based QSC AG grew its revenues by 29 percent to EUR 38.0 million in the third quarter of 2004, as opposed to EUR 29.5 million for the same quarter the year before. During the first nine months of 2004, strong demand from project and business customers led to a 24-percent rise in revenues to EUR 105.8 million, as opposed to EUR 85.3 million for the comparable period the year before.
For the third time in a row, QSC posted a quarterly EBITDA increase. According to preliminary results, the company recorded an operating profit of EUR 0.4 million before depreciation, amortization, interest and taxes, as opposed to EUR -5.5 million for the same quarter the year before. Based on a 9-month comparison, QSC improved its EBITDA by EUR 14.9 million to EUR 0.7 million year to date, as opposed to EUR -14.2 million in the first nine months of the year before.
QSC generated a free cash flow of EUR 0.6 million in the third quarter of 2004, even though it had been building a new line of business during this period, carrier-to-carrier service, and additionally incurred significant start up expenses in connection with major contracts in the project business. The company, which is virtually debt-free, thus grew its liquid assets to EUR 39.7 million as of September 30, 2004.
Given this highly positive development of its underlying business, QSC is confirming its full year forecast for 2004. The company anticipates revenue growth of at least 20 percent to more than EUR 138 million, as well as a positive EBITDA.

Queries to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-109
Email: invest@qsc.de

Notes:
The 9-months report of QSC AG is available starting the 23^rd 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 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.