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QSC AG

Investor Presentation • Aug 20, 2008

343_ip_2008-08-20_0944bc39-0064-4a15-bfbd-caced364eb2f.pdf

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QSC AG

1

Company PresentationResults Q2 2008

Cologne, August 20, 2008

20.08.08

    1. Operational Update
    1. Financial Results / Outlook

OPERATIONAL OVERVIEW FOR Q2 2008

  • •2nd data point after Q1 2008; QSC is back on track
  • •Wholesale / Reseller segment driven by high increase of ULLs
  • •Managed Services segment back on track
  • •Completion of network expansion project within Plusnet
  • •Swift integration of Broadnet

VERY GOOD DEVELOPMENT OF BUSINESS IN Q2 2008

  • •Revenues up by 26% to € 100.2 million
  • •EBITDA up by 30% to € 14.2 million
  • •EBITDA-margin of 14%

  • •Net loss of € -1.5 million

  • •CAPEX of € 19.7 million – thereof 60% customer-related

  • •€ 63.0 million liquidity as of June 30, 2008

DRIVING FACTOR: HIGH SUPPLY OF ULLsYear-to-date growth very promising

5

MORE ULLs LEAD TO HIGHER REVENUE SHARE OF WHOLESALE / RESELLER BUSINESS

6

STRONG INCREASE IN WHOLESALE BUSINESS

  • Break-up of revenues
  • •49% of segment revenues from ADSL2+
  • •13% from legacy voice
  • • Product revenues with companies who also act as resellers are now part of the segment

Market 2008

  • •3.5 million new DSL customers expected
  • •Growing demand for unbundled lines
  • • Substitution of T-DSL Resale(3.2 million on June 30, 2008) by ULLs

QSC 2008

  • •All major wholesale partners under contract
  • • Solid business with resellers i.e. international carriers

PRODUCT BUSINESS STILL AFFECTED BY LEGACY VOICE

Results Q2 2008 –

MANAGED SERVICES BACK ON GROWTH TRACK

9

Market 2008

  • • High interest in new services like Communication as a Service
  • •Integration of VoIP in IP-VPN solutions

QSC 2008

  • •Well-positioned for the new services
  • • Managed Services profits strongly from reorganization
  • • Growing demand of Managed and Hosted Services like VirtuOS ACD
  • • New nationwide customers likeBMW dealership network(285 dealers at 700 locations)

NETWORK ROLL-OUT IS COMPLETED

  • • 1,900 central officesunder network coverage
  • • Next Generation Network (NGN) up and running
  • •More than 90% of the traffic is IP-traffic
  • •Significant cost-advantages
  • Nationwide voice network (474 POIs)
  • Separate Wireless Local Loop (WLL) network
  • •in 42 regions
  • •up to 400 Mbps
  • Significant spare capacity still available
  • •Backbone
  • •Ports / Line cards
  • Network breakeven in sight
  • • QSC will cross the threshold at some 550,000 ULLs=> 467,100 ULLs connected per June 30, 2008 => 373,500 ULLs connected per March 31, 2008

SWIFT INTEGRATION OF BROADNET

Integration of Broadnet

  • All headquarter functions are centralized
  • All sales offices in Germany are merged
  • Overlaps of the network are eliminated

QSC's BUSINESS MODEL:MOVING UP THE VALUE CHAIN

12

    1. Operational Update
    1. Financial Results / Outlook

QUARTERLY REVENUES > € 100 MILLION

14

HIGHER REVENUES LEAD TO HIGHER EBITDA

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

STRONG EBITDA GROWTH IN 2008

DEPRECIATION FOLLOWS CUSTOMER GROWTH

  • periods for COs build out
  • DSL & network equipment: 8 years
  • (amortized over just 24 months)

CUSTOMER GROWTH DRIVES CAPEX IN Q2 2008

90% OF CUSTOMER-DRIVEN CAPEX ISINVOICED TO CUSTOMERS

STRONG IMPROVEMENT OF CASH / REVENUES RATIO

21

OUTLOOKQSC again raises guidance for 2008

    • •QSC expects revenues of more than € 405 million
  • •QSC expects EBITDA of more than € 60 million
  • • Higher revenues lead to higher CAPEX of more than € 80 million
  • •Net income ~ € 0 million

MULTIPLE OPPORTUNITIES FOR FURTHER GROWTH

  • •QSC – The NGN-Carrier
  • •Germany = DSL country & direct access is "King"
  • •Strong growth in Wholesale / Reseller business
  • •Back on track with Managed Services
  • • New opportunities by moving up the value chain withSoftware as a Service (Centrex, ACD)
  • • Being a SME itself gives QSC a competitive edge as a premium provider in the SME business
  • •Network break even in sight

FINANCIAL CALENDER 2008

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CONTACT

QSC AGArne ThullInvestor RelationsMathias-Brüggen-Strasse 55 50829 CologneGermany

Phone +49-(0)221-6698-724 Fax +49-(0)221-6698-009 E-mail [email protected] Web 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

APPENDIX

STABLE SHAREHOLDER STRUCTURE SINCE IPO

NEW SEGMENTATION REFLECTS NEW ORGANIZATIONAL STRUCTURE

ALL SEGMENTS WITH ATTRACTIVE MARGINS

MANAGED SERVICESStrong market growth

PRODUCT BUSINESS Growing business customer market for DSL connections

WHOLESALE BUSINESSGermany is a DSL country

Main drivers

  • •Growth in demand for DSL
  • • Large retail ISPs need accessto "complete" ULL vs. "bundled" T-DSL wholesale lines
  • new DSL lines on "complete" ULL
  • migration of existing T-DSL wholesale lines to "complete"ULL
  • •Possible consolidation in retail

Competitors

•T-Home, Telefonica, Arcor

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