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QSC again raises guidance for 2008 / Preliminary numbers for Q2 2008

  • Revenues advance by 26 percent to € 100.2 million
  • EBITDA up by 30 percent to € 14.2 million
  • QSC again raises guidance:
    - Revenues of more than € 405 million anticipated
    - EBITDA of more than € 60 million anticipated

Cologne, August 11, 2008. QSC AG sustained its strong and profitable growth in the second quarter of 2008, growing its revenues by 26 percent to € 100.2 million according to preliminary results as opposed to € 79.6 million for the same quarter the year before.

The company posted its strongest growth in the Wholesale/Reseller segment where revenues surged by 69 percent to € 56.6 million. QSC continued to benefit from the high number of new unbundled local loops (ULL); in the second quarter of 2008, the company connected a total of 93,600 new DSL lines, increasing the number of connected local loops by 25 percent to 467,100. Whilst revenues in the Products segment declined by 17 percent to € 25.3 million due to sustained price pressure in conventional voice telephony, in particular among residential customers, the growing demand for IP-VPN solutions and network-related services in the Managed Services segment fueled a 17-percent rise in revenues to € 18.3 million.

Given this strong revenue growth and the continued benefits from synergies stemming from the Broadnet merger, QSC increased its preliminary EBITDA by 30 percent to € 14.2 million, as opposed to € 10.9 million the year before. The company's EBITDA margin rose by two percentage points to 14 percent within the space of a single quarter.

Return to the profitability zone
Strong customer growth, along with corresponding depreciation on capitalized customer connections and the network expansion project, increased depreciation expense to € 15.0 million in the second quarter of 2008, as opposed to € 10.4 million for the corresponding quarter the year before. The preliminary company's net loss amounted to € -1.5 million, as opposed to net income of € 0.5 million in the second quarter of 2007; over the first quarter of 2008, the net result improved by € 2.6 million. With a view to the company's very good development in the second quarter of 2008, QSC Chief Executive Officer Dr. Bernd Schlobohm states: "QSC will be returning to the profitability zone in the second half of the year."

Network expansion project concluded
Capital expenditures in the second quarter of 2008 totaled € 19.7 million, as opposed to € 18.7 million for the same quarter the year before. Capital expenditures declined by € 8.9 million from its peak in the first quarter of 2008, as QSC had concluded its extensive network expansion project during the second quarter. The percentage of customer-related capital expenditures amounted to 60 percent in the second quarter of 2008, with QSC swiftly invoicing some 90 percent of these capital expenditures to the respective customers. With liquidity totalling € 63.0 million as of June 30, 2008, QSC sees itself well financed for its anticipated growth.

Guidance raised
Given the very good course of business during the first half of 2008, QSC is again raising the guidance for 2008, which it had already increased on May 15, 2008: The company now anticipates revenues of more than € 405 million and an EBITDA of more than € 60 million. The company had previously been planning on revenues at the upper end of a € 385 to € 405 million range and an EBITDA at the upper end of a € 50 to € 60 million range. The company continues to aim for a break-even net result. Dr. Schlobohm: "The very good development of our operating business, the swift integration of Broadnet and the conclusion of the network expansion project give me every reason to be optimistic about the coming quarters."

Queries to:
QSC AG
Arne Thull
Investor Relations
Mathias-Brüggen-Str. 55, 50829 Köln

Fon: +49 221 6698-724
Fax: +49 221 6698-009
E-mail: invest@qsc.de
Internet: www.qsc.de

Notes:
From August 20, 2008, the 6-months report will be available under www.qsc.de/en/investor-relations.html. 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.


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