10/31/2007

Broadnet merger with QSC takes effect today

Cologne, October 31, 2007 - The merger of Broadnet AG, of Hamburg (ISIN DE0005490866), with QSC AG, of Cologne (ISIN DE0005137004), today went into force retroactively as of January 1, 2007, following entry in the Commercial Registers of Companies in Hamburg and Cologne. Broadnet AG is extinct therewith; its former shareholders are shareholders of QSC AG now.

In June 2006, QSC had acquired 67 percent of the shares of Broadnet, and thus a majority interest in this telecommunications provider specializing in business customers, and in November 2006 increased its shareholdings to over 90 percent. In May 2007, the Broadnet annual shareholders meeting approved the merger with QSC AG. The lawsuits that had been filed against the merger resolution were settled out of court in mid October 2007.

The transaction will now be concluded through the issuance of 1,090,210 new shares of QSC stock to the former Broadnet shareholders in exchange for their former Broadnet shares. It is anticipated that the new shares will be eligible to be traded on the Frankfurt Securities Exchange (Prime Standard) beginning November 1, 2007.

QSC anticipates synergies in the low single-digit million range in the months to come, which will essentially be achieved through integration of the networks and optimization of administrative expenses. One face to the customer, consistent processes and the utilization of mutual value creation potential will lend additional dynamics to growth in the Managed Services, Direct Access and Wholesale strategic business units.

"We are pleased that the merger has gone into force earlier than had been expected. This will enable us to utilize the growth potential faster than had been planned," noted Bernd Schlobohm, Chief Executive Officer of QSC AG.

Broadnet's focus and particular competence was on DSL, VPN and Voice over IP services for business customers from the small and medium enterprise segment. More than 96 percent of Broadnet's former revenues are now being generated in QSC's strategic segments.

"We are also keenly interested in the Wireless Local Loop license for 42 regions. This microwave technology offers QSC customers an alternative to terrestrial DSL and fiber optic links, especially in connection with high broadband needs. This means that we can thus achieve bandwidths of up to 400 Mbit/s for special business applications," explains Bernd Schlobohm. Some 160 of Broadnet's former central offices are now additionally complementing the QSC network, which will be expanded to some 2,000 central offices by the end of the first quarter of 2008. This means that QSC will be able to reach some 70 percent of all business customer locations in Germany.

With the merger, the customers of both QSC as well as the former Broadnet will thus be offered a broader portfolio of services with greater network coverage. In doing so, QSC is strengthening its market position as one of the leading telecommunications providers for business customers in Germany.

The Chief Executive Officer also sees the growth in the workforce in a positive light; Broadnet employed nearly 200 people. "In recent months, we have been observing heightened competition for talent in the telecommunications market. With the people of Broadnet, we are augmenting our team with experienced and competent minds." In the future, central operations of the Managed Services Business Unit, as well as the Microwave Center of Excellence, in particular, will be housed in the Hamburg location.

About QSC
Cologne-based QSC AG (QSC) is a nationwide telecommunication provider with its own DSL network, offering businesses and premium residential customers a comprehensive portfolio of high-quality broadband communication options. QSC implements complete enterprise networks (VPNs), operates voice and data services and provides leased lines in a wide variety of bandwidths for business customers. Residential customers benefit from high-quality DSL connections, complete with VoIP applications. In addition, QSC utilizes its own network as the basis for its wholesale business and provides high-level upstream products to carriers, Internet service providers (ISPs) as well as marketing partners with strong consumer brands. QSC operates on a nearly nationwide scale and connects over 200 German cities over its own broadband network and currently employs a workforce of 800 people. QSC is listed on the TecDAX.

QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-724
Fax: +49(0)221-6698-009
E-mail: invest@qsc.de