QSC AG

Investor Presentation • Jun 23, 2010

QSC AGCompany PresentationResults Q1 2010

Cologne, May 10, 2010

AGENDA

• 1. Highlights Q1 2010
• 1. Financial results Q1 2010
• 1. Outlook 2010
• 1. Questions & Answers

OUR MISSION STATEMENT

QSC is the leading medium-sized provider in the telecommunications market who creates sustainable value for medium-sized companies, cooperation partners and employees through highest quality and customer focus!

ONGOING TRANSFORMATION OF QSC

REVENUE MIX (in $\epsilon$ million)

$AG$ Premium Telecommunication

$-$ Results Q1 2010 $-$

QSC'S BUSINESS MODEL: FOCUS ON SERVICESBASED ON OUR NEXT GENERATION NETWORK

CLEAR FOCUS ON HIGH-MARGIN REVENUES AND FINANCIAL STRENGTH

		FREE CASH FLOW (in € million)
4.6	$+0.6$
		4.0
Q1/10		Q1/09

Results Q1 2010 –

MAJOR ACHIEVEMENTS IN Q1 2010

• • New distributor: NT Plus has become a further partner beside Michael Telecom and ALLNET
• • Training of our new sales partners:
• PST (> 20 sales representative, exclusively for QSC)
• Advantecon (former PBX sales representative, exclusively for QSC)
• SCC (small system houses, exclusively for QSC)
• •Cooperation with telco company Aastra to optimize IPfonie centraflex
• •New mid-sized customers, e.g. hotel chains Mövenpick and DERAG
• •Ongoing "Network Synergy" discussions

"LEGACY REVENUE STREAMS" TO OVERCOMPENSATE IN THE NEXT QUARTERS

• •ADSL2+ is reaching market saturation (-)
• •Legacy voice is losing importance (-)
• •Rising revenues with IP-based services (+)

ADSL2+ IS REACHING MARKET SATURATION

Key facts for Q1 2010

• • ADSL2+ revenues declined by 9%to € 27.2 million
• •Number of lines declined to 575,200

Main reasons

• • Fierce price competition=> QSC did not participate
• •Market saturation especially in urban areas
• •Growing competition of cable operators

Our expectation

•Further decline because of ordinary churn

LEGACY VOICE IS LOSING IMPORTANCE

Key facts for Q1 2010

• Call-by-Call and Preselect revenues declinedby 18% to € 9.5 million

Main reasons

• •Fierce price competition
• •Competition of flat rates and VoIP

Our expectation

• •Further decline of these lower-margin revenues
• • QSC will profit twice from the tendency towards VoIP
• •Rising revenues with IPfonie products
• •Rising revenues in Voice Wholesale

RISING REVENUES WITH IP-BASED SERVICES

Key facts for Q1 2010

• Revenues with IP-based services roseby 5% to € 69.2 million

Main reasons

• •Growing demand for "all IP" solutions
• • Focused sales strategy on mid-sizedcompanies is starting to pay off

Our expectation

• • "IP-Revenues" will rise because of
• •A growing number of mid-sized customers
• •Successes of new distribution partners
• • Launch of more innovative IP-basedservices

QSC IS ON THE WAY TO BECOMING A SERVICE PROVIDER ...

$-$ Results Q1 2010 $-$

$12$

… AND HAS THE CHANCE TO DOUBLE ITS POTENTIAL MARKET IN THE COMING YEARS

Market 2010: € 9.8 billion (10% of ICT budget)

Results Q1 2010 –

• 1. Highlights Q1 2010
• 1. Financial results Q1 2010
• 1. Outlook 2010
• 1. Questions & Answers

HIGHER PROFITABILITY IN Q1 2010

I i l l i	Q 1 2 0 0 9	Q 1 2 0 1 0
€ n m o n s R • e e n e s v u	1 0 7. 6	1 0 5. 9	1. 6 % -
( ) N k 1 t • e w o r e x p e n s e s	7 1. 1	6 8. 3	3 9 % -
G f i t • r o s s p r o	3 6. 5 +	3 7. 6 +	3. 0 % +
( 1 ) O h i t t • e r o p e r a n g e p e n s e s x	1 7. 0	1 8. 0	5 9 % +
E B I T D A •	1 9. 5 +	1 9. 6 +	0. 5 % +
D i i t • e p r e c a o n	1 7. 1	1 5. 6	8. 8 % -
E B I T •	2 5 +	3. 9 +	5 6. 0 % +
F i i l l t • n a n c a r e s u s	0. 6 -	0. 4 -	3 3 3 % +
I t • n c o m e a x e s	0. 5 -	0. 3 -	4 0. 0 % +
N f i t t • e p r o	1. 4 +	3. 2 +	1 2 8. 6 % +

(1) Excluding depreciation and non-cash share-based payments

HIGH-MARGIN REVENUES LEAD TO ATTRACTIVE EBITDA LEVEL

DEPRECIATION REACHED ITS PEAK IN 2009

Results Q1 2010 –

Drivers

• High growth in ADSL2+ business in 2008 led to high depreciation (depreciation period: 2 years) in 2009
• Network rollout has been completed

Consequence

Depreciation is declining in 2010 and beyond

QSC IS EARNING A FAST RISING NET PROFIT

Results Q1 2010 –

BU MANAGED SERVICES STABLE DEVELOPMENT IN A DIFFICULT ENVIRONMENT

Results Q1 2010 –

BU PRODUCTSRISING PROFITS DESPITE LOWER REVENUES

Results Q1 2010 –

BU WHOLESALE/RESELLERS IMPORTANCE OF VOICE WHOLESALE IS RISING

WHOLESALE/RESELLER (in $\epsilon$ million)

21

$AG$ Premium Telecommunication

$-$ Results Q1 2010 -

LOW CAPEX LEVEL IN 2010

Results Q1 2010 –

QSC HAS GENERATED A POSITIVE FREE CASH FLOW ...

DERIVATION OF FREE CASH FLOW (in € million)

… QUARTER BY QUARTER SINCE Q1 2009

Results Q1 2010 –

QSC IS BUILDING UP A NET CASH POSITION

I € i l l i n m o n s	D 3 1, 2 0 0 9 e c.	M 3 1, 2 0 1 0 a r.
C h d h d i t- t t a s a n s o r e r m e p o s s +	4 1. 0 +	4 0. 7 +	0. 3 -
A i l b l f l f i i l t v a a e- o r- s a e n a n c a a s s e s +	0. 3 +	0. 3 +	-
L i i d i t q u y +	4 1. 3 +	4 1. 0 +	0. 3 -
F i l b l i i t n a n c e e a s e o g a o n s -	2 2 8 -	1 8. 5 -	4 3 +
O h h l i b i l i i t t- t t e r s o r e r m a e s -	2 8 -	2 2 -	0. 6 +
L i b i l i i d b k t t a e s u e o a n s -	1 5. 0 -	1 5. 0 -	-
F i i l d b t n a n c a e -	4 0. 6 -	3 5. 7 -	4. 9 +
N l i i d i t t e q u y =	0. 7 +	5. 3 +	4. 6 +

1. Highlights Q1 2010

2. Financial results Q1 2010

3.Outlook 2010

1. Questions & Answers

OUTLOOK 2010BUSINESS ENVIRONMENT REMAINS CHALLENGING

• •Still hesitant economic recovery in Germany and beyond
• • Split development of QSC's markets
• •Ongoing price pressure in legacy voice
• •Market saturation and rising price pressure in ADSL2+

versus

• •Rising market share of VoIP services & applications
• •Stronger demand for IP-VPN and value added services
• •Growing interest in telco-IT service solutions

OUTLOOK 2010FOCUS ON PROFITABILITY AND FINANCIAL STRENGTH

OUTLOOK 2010FINANCIAL STRENGTH TAKES CENTER STAGE

• • 70% increase in free cash flow driven by
• •Improved efficiency
• •Strict cost discipline
• •Low and stable level of CAPEX (approx. 10% of revenues)

but mostly driven by

•Transformation to higher-margin products and services

THE FUTURE OF QSC FROM A NETCO TO A SERVCO

30

$-$ Results Q1 2010 $-$

• 1. Highlights Q1 2010
• 1. Financial results Q1 2010
• 1. Outlook 2010
• 4.Questions & Answers

FINANCIAL CALENDAR

M 2 0 2 0 1 0 a y ,	A l S h h l d M i t n n u a a r e o e r s e e n g
M 2 1 2 0 1 0 a y ,	G A i C C f & t t e r m a n u s r a n o r p o r a e o n e r e n c e D h B k F k f t t e u s c e a n r a n u r ,
A 9 2 0 1 0 t u g u s ,	P b l i i f Q l R I I / 2 0 1 0 t t t u c a o n o u a r e r y e p o r
N b 8 2 0 1 0 o v e m e r ,	P b l i i f Q l R I I I / 2 0 1 0 t t t u c a o n o u a r e r y e p o r
N b 2 2 2 4 2 0 1 0 o e m e r v - ,	G E i F F l l 2 0 1 0 t e r m a n q o r m a u y u D h B ö F k f t t e s c e r s e r a n r u u ,

CONTACT

QSC AGArne ThullHead of Investor RelationsMathias-Brüggen-Strasse 5550829 CologneGermany

Phone +49-(0)221-6698-724Fax +49-(0)221-6698-009E-mail invest@qsc.deWeb www.qsc.de

SAFE HARBOR STATEMENT This presentation includes forward-looking statements as such term is defined in the U.S. Private Securities Litigation Act of 1995. These forward-looking statements are based on management's current expectations and projections of future events and are subject to risks and uncertainties. Many factors could cause actual results to vary materially from future results expressed or implied by such forward-looking statements, including, but not limited to, changes in the competitive environment, changes in the rate of development and expansion of the technical capabilities of DSL technology, changes in prices of DSL technology and market share of our competitors, changes in the rate of development and expansion of alternative broadband technologies and changes in prices of such alternative broadband technologies, changes in government regulation, legal precedents or court decisions relating, among other things, to line sharing, rent for colocation and unbundled local loops, the pricing and timely availability of leased lines, and other matters that might have an effect on our business, the timely development of value-added services, our ability to maintain and expand current marketing and distribution agreements and enter into new marketing and distribution agreements, our ability to receive additional financing if management planning targets are not met, the timely and complete payment of outstanding receivables from our distribution partners and resellers of QSC services and products, as well as the availability of sufficiently qualified employees.

A complete list of the risks, uncertainties and other factors facing us can be found in our public reports and filings with the U.S. Securities and Exchange Commission.

DISCLAIMER

• • This document has been produced by QSC AG (the "Company") and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person
• • No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document
• • The information contained in this document does not constitute or form a part of, and should not be construed as, an offer of securities for sale or invitation to subscribe for or purchase any securities and neither this document nor any information contained herein shall form the basis of, or be relied on in connection with, any offer of securities for sale or commitment whatsoever

STABLE SHAREHOLDER STRUCTURE SINCE IPO

SHAREHOLDER STRUCTURE

Status quo: 30/04/2010