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First quarter 2002: QSC continues growth course and reduces losses

Cologne, May 28, 2002. QSC AG, a professional DSL service provider in Germany, confirms its previously announced preliminary revenues of EUR 9.6 million for the first quarter of 2002 (first quarter 2001: EUR 5.3 million). Despite the weak economy, the company was able to manage an increase of its revenues from the fourth quarter of 2001. "Our revenues develop as planned", says CEO Bernd Schlobohm and adds, "in fact, the quarterly result is even better than expected". The EBITDA-loss for the first quarter of 2002 came in at EUR -16.3 million (first quarter 2001: EUR -22.1 million), an improvement on the corresponding period in 2001 of more than 25%. At EUR -23.8 million, the after-tax loss was also visibly better compared to the same period last year (first quarter 2001: EUR -27.5 million). The cash outflow continues to decrease as well. As at March 31, 2002, the company had cash and cash equivalents of EUR 134.8 million compared with EUR 153.8 million at December 31, 2001, resulting in a net cash burn of EUR 19 million compared to 22.2 million in the fourth quarter of 2001. QSC continues to expect to reach EBITDA break-even during 2003 and cash flow break-even during 2004.

Focus on business customer segment

QSC confirms its financial targets for the current business year. The company expects to realise revenues between EUR 46 and 54 million. EBITDA-losses are expected to come in at EUR -60 to -70 million. With its focus on business customers, QSC is committed to selling high margin products. "Many companies are ready to make investments to optimise their voice and data communications", CEO Schlobohm explains, "we are talking to enterprises of all sizes." With the expansion of its service portfolio, QSC is developing into a solution provider. First virtual private etworks solutions (VPN) are already being implemented. As of this summer, the new business customer product QSC-Voice will be launched successively in all cities covered by the QSC network. QSC-Voice bundles digital voice telephony with broadband data communication. In addition to the conventional ISDN features and security parameters, QSC-Voice allows for up to eight parallel voice channels on one single broadband line, allowing high speed surfing of the Net at the same time. "QSC-Voice allows us to become a true alternative voice carrier for our business clientele on the last mile," says Bernd Schlobohm pointing out the benefits of QSC-Voice. As opposed to the as yet unproven Voice-over-IP technology, which may necessitate new terminal equipment at the customer site, QSC-Voice is based on tried and proven digital network standards of the latest generation (for e.g. ATM).

For further information:

Claudia Zimmermann
Phone: 0221/6698-235
Fax: 0221/6698-289
Mail: presse@qsc.de

Investor Relations-Partner der QSC AG
Schumachers AG
Dorothee Kagelmann
Phone: 089/4892720
Fax : 089/48927212
Mail : qsc@schumachers.net

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.