08/27/2002

Second quarter of 2002: QSC's revenues up 25% from previous quarter; improved preliminary numbers

Cologne, August 27, 2002. QSC AG, a German-based professional DSL service provider, generated revenues of EUR 12.0 million during the second quarter of 2002 (Q2 2001: EUR 7.1 million), thus growing its revenues by 25 percent over the previous quarter (Q1 2002: EUR 9.6 million). Year to date, the company recorded revenues of EUR 21.5 million during the first half of 2002, as opposed to EUR 12.4 million for the first half of 2001. "Our policy of broadening our previous Q-DSL product portfolio to include personalized communication solutions for business customers is now beginning to bear fruit." explains CEO Bernd Schlobohm.
The first revenues stemming from the project business that was launched in the spring of 2002 were generated during the period under review, with QSC winning the Kaufhof retail group as its first prominent major account in this segment. QSC succeeded in further limiting its EBITDA loss during the second quarter of 2002 to EUR -14.9 million (Q2 2001: EUR -23.6 million), thus improving on the EUR -16.0 million announced as a preliminary result on July 25, 2002, by more than EUR 1 million. Contributing first and foremost to this positive development is the rising percentage of revenues attributable to value-added services for the business customer segment, as well as the company's growing customer base. Network optimization has also shown significant impact. This led to an EBITDA result of EUR -31.2 million for the first half of 2002 (H1 2001: EUR -45.7 million). For the fifth time in a row, the company reduced its quarterly cash outflow: during the second quarter of 2002, the net cash burn totaled EUR -17.1 million, as opposed to EUR -19.0 million for the first quarter of 2002, representing an additional 10-percent improvement. Liquidity on June 30, 2002 totaled EUR 117.7 million, as opposed to EUR 153.8 million on December 31, 2001.

Growing demand for broadband communication solutions

More and more organizations are opting for complex, tailor-made communication solutions. QSC is responding to these needs by expanding its project business. The company is specifically targeting industries whose business is based upon reliable, broadband communication, including users of design and engineering software as well as service providers from the multimedia segment. Both security features as well as voice telephony - which will be available in select cities by the end of the year - round out QSC's portfolio of services aimed at providing end-to-end, integrated communication solutions and are being well received in the marketplace.

Given the positive prospects in the business customer segment, QSC is confirming the current fiscal year forecasts that were made at the outset of the year: revenues are planned to range between EUR 46 and 54 million, the EBITDA loss between EUR -60 and -70 million. The company continues to anticipate reaching the planned EBITDA break-even point during the course of the year 2003, with the planned cash flow break-even point expected to follow during the course of the year 2004.

For further information:

QSC AG
Claudia Zimmermann
Spokesperson
Phone: +49(0)221/6698-235
Fax: +49(0)221/6698-289
Mail: presse@qsc.de

Investor Relations-Partner der QSC AG
Schumachers AG
Dorothee Kagelmann/Stefan Schwartz
Phone: +49(0)89/4892720
Fax: +49(0)89/48927212
Mail: qsc@schumachers.net

Notes:
This Adhoc annoucement 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.