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QSC continued to boost revenues in Q2, adjusts forecasts

Cologne, August 28, 2001. QSC AG, Germany's leading alternative DSL provider, generated EUR 12.4 million in sales in the first half of 2001 (H1/2000: EUR 0.4 million) and had sold 15,636 DSL lines as at June 30, 2001 (800 as at June 30, 2000). Pre-tax losses for the first six months of 2001 were EUR 54.7 million (H1/2000: EUR -30.1 million), significantly less than expected by the market. The EBITDA loss was EUR 45.7 million (H1/2000: EUR -25.1 million). This substantial loss reduction compared to the business plan was due in particular to savings in operational expenses, the completion of the network build out as well as a major revenue increase.

However, there are signs of slower sales growth in the third quarter. Faced with a dramatic slowdown in the economy, business customers are withholding investments in IT and telecommunications services - strong demand for DSL by private customers does not fully compensate for slower growth in sales to business customers. For these reasons, QSC AG is lowering its sales forecast for the current business year from EUR 38 - 46 million to EUR 26 - 34 million, with no change being made to the forecast number of lines by the end of the year, namely 40,000 to 50,000 DSL lines sold. At the same time, however, the company is improving its forecast figure for EBITDA losses from EUR 90 - 120 million to EUR 85 - 100 million. QSC continues to assume that EBITDA earnings will turn positive in 2003.

As at June 30, 2001 QSC AG was virtually debt free (EUR 0.3 million financing debts), with cash and cash equivalents totalling EUR 211.4 million (H1/2000: EUR 294.8 million). The company expects a lower rate of cash burn starting from the third quarter of the year.

For further information:
Investor Relations partner of QSC AG
Schumachers AG
Dorothee Kagelmann
Tel.: +49 (0)89/4892720
Fax: +49 (0)89/48927212

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.