08/20/2008

QSC returns to the profitability zone this quarter / Submission of Half-Year Report

Cologne, August 20, 2008. QSC today submitted its Half-Year Report; there were no material changes to the preliminary results announced on August 11, 2008.

In the second quarter of 2008, QSC grew its revenues by 26 percent to € 100.2 million. While expenses for the network, which had been significantly expanded last year, rose by 37 percent to € 69.3 million, selling and marketing expenses in the amount of € 10.8 million remained virtually unchanged from the same quarter the year before, where this line item had totaled € 10.6 million; general and administrative expenses declined by 22 percent to € 6.4 million. In addition to profitable revenue growth, QSC's improved cost position also stemmed from the successful achievement of synergies following the Broadnet merger. As a result, QSC's EBITDA rose by 30 percent to € 14.2 million in the second quarter of 2008. The Company still recorded a net loss of € -1.5 million, as opposed to net income of € 0.5 million for the second quarter of 2007; however, the company had already improved its net result by € 2.6 million over the first quarter of 2008.

Both in the second as well as in the current third quarter of 2008, QSC has been benefiting from unabated strong demand in its Wholesale business. In August 2008, QSC's network operating company Plusnet connected its 500,000th line and now numbers among the five largest unbundled local loop procurers in Germany. And the company continues to generating rising revenues with attractive margins in the Managed Services segment, as well. QSC's Chief Executive Officer Dr. Bernd Schlobohm says: "The good development of our operating business in the second quarter has been sustained. In the current quarter, QSC will grow revenues and EBITDA further and cross the profitability threshold."

Following the second increase in its guidance on August 11, 2008, QSC now anticipates revenues of more than € 405 million and an EBITDA of more than € 60 million for the full 2008 fiscal year. At the same time, the company is also aiming for a breakeven net result.

Queries to:
QSC AG
Claudia Zimmermann
Head of Corporate Communications
Mathias-Brüggen-Str. 55
D-50829 Cologne
Tel: 0221 6698-235
Fax: 0221 6698-289
E-Mail: presse@qsc.de
Internet: www.qsc.de

Notes:
This corporate news contains forward-looking statements. 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.