KPNQwest N.V. doubles Revenues in first Quarter 2001

Total revenue of 162.7 million, grows 106.7 per cent over Q1 2000

HOOFDDORP, NL / Wien, (pts050/23.04.2001/16:24)

- Total revenue of Eur162.7 million, grows 106.7% over Q1 2000
- Sequentially, revenue grows 12.6% over Q4 2000
- Communication services revenue up 105% over Q1 2000 and 15.2% sequentially to Eur155 million
- Strong Growth across products and market segments
- Significant improvement in margins year over year and sequentially

KPNQwest, the leading pan-European data communications company, today reported strong growth in first quarter 2001 revenues. For the first quarter of 2001, the company reported total revenue of Eur162.7 million and communication services revenue of Eur155.0 million - more than doubling each of these figures compared to the same period in 2000.

Sequentially, total revenue grew by 12.6% over the fourth quarter of 2000, and communication services revenue increased 15.2%. For the seventh consecutive quarter, the company's results met or exceeded the consensus of analysts' estimates for revenue, earnings before interest, taxes, depreciation and amortisation ("EBITDA") and earnings per share ("EPS").

"KPNQwest continues to experience strong growth across its product lines in all segments of the European data communications market. We are also demonstrating our forecasted improvement in gross margins, Selling General & Administrative (SG&A) costs as a percentage of revenues, and EBITDA margins as we execute our business plan. Our focused execution has delivered measurable results," said Jack McMaster, President and CEO of KPNQwest.

"We believe that we can achieve the financial objectives we have set for 2001 of approximately Eur780 million in revenue for the year and EBITDA positive for the fourth quarter."

REVENUES
During the first quarter of 2001, KPNQwest reported total revenue of Eur162.7 million, an increase of approximately 106.7%, compared to total revenue of Eur78.7 million for the first quarter of 2000. In addition, total revenue grew sequentially by 12.6% from Eur144.5 million for the fourth quarter of 2000.

"Financial discipline and focused execution have allowed KPNQwest to continue strong revenue development in the high-growth European data communications market." said Willem Ackermans, Executive Vice President and Chief Financial Officer. "This discipline and focus have led us to a point where for the first quarter in KPNQwest history we have achieved gross margins of 40%. Our discipline also resulted in SG&A costs achieving real quarter-on-quarter reductions and improving by 130 basis points to 52.9% of revenue. These financial improvements were achieved without impacting revenue growth and are sustainable. This financial performance led to a significant improvement in EBITDA, both in margin and in absolute terms."

Communication Services Revenue
Communication services revenue increased 105.0% from Eur75.6 million for the quarter ended 31 March 2000, and 15.2% sequentially to Eur155.0 million. This growth was largely attributable to increased market penetration and first-mover advantage in the hosting and IP value added services (IP VAS) products. The largest growth for IP VAS was driven by strong demand and increased provisioning of hosting services, which grew more than two-fold over the prior quarter.

As of the end of the quarter, the company had over 125,000 customer accounts, which was comprised of approximately 100,000 business Internet accounts - a growth of 25% over the previous year. Specifically, we experienced double digit sequential growth in revenue from global accounts and from the National SME segment, demonstrating our ability to grow revenues across all market segments.

Infrastructure Revenue
For the first quarter of 2001, KPNQwest reported a total of Eur7.7 million in infrastructure sales, compared to Eur3.1 million of infrastructure sales for the same period in 2000 and Eur9.9 million for the fourth quarter of 2000.

The Company closed additional infrastructure contracts valued at Eur90 million during the first quarter. The cumulative closed infrastructure contracts to date amount to approximately Eur765 million, of which over 90% will be recognised as revenue in subsequent periods.

OPERATING COSTS AND MARGINS
For the first quarter of 2001 cost of sales totalled Eur97.5 million, resulting in a gross margin of 40.1% - the first time in the company's history that it has entered the 40% range. The 40.1% gross margin for the first quarter represents a significant improvement compared to a 25.4% gross margin for the same period in 2000, and 38.0% in the fourth quarter of 2000.

Continued migration of traffic from leased facilities, the expanded Swiss footprint and increased on-net sales were the primary drivers behind the improvement in gross margin of 35.7% for communications services for the fourth quarter of 2000 to the reported 39.4% for the current quarter.

In addition to the sizeable improvement in gross margin, KPNQwest successfully improved SG&A costs from Eur87.8 million, or 60.8% of total revenue, in the fourth quarter to Eur86.1, or 52.9% of revenue for the first quarter of 2001. The improvement in SG&A spending is the result of centralised back-office support, as well as top-line revenue growth driven by the sales channel investments made throughout 2000.

EBITDA
The company reported an EBITDA loss for the first quarter Eur(20.9) million, representing (12.8)% of revenues compared to Eur(31.9) million, or (40.5)% of revenues in the same period of the prior year. Sequentially, the reported EBITDA loss improved from Eur(32.9) million, or (22.8)% of revenues.

EARNINGS
The company's first quarter net loss of Eur(46.4) million, or Eur(0.10) loss per share, improved 18.3% over the net loss of Eur(56.8) million or loss per share of Eur(0.13) per share for the fourth quarter of 2000. For the first quarter of 2000, KPNQwest reported a net loss of Eur(27.7) million or Eur(0.06) loss per share.

CONSTRUCTION OF THE KPNQWEST NETWORK
Through the end of March 31, 2001 KPNQwest had completed three of the seven self-healing, fibre optic, EuroRings and announced completion 2,000 km of the Swiss portion in the Southern Ring. Currently, the KPNQwest network spans 8,200 km and provides unparalleled connectivity to 30 European cities. With the recently completed ring in Switzerland, KPNQwest's network provides more than one million fibre kilometres - Europe's premier, wholly owned end-to-end network based on a single protocol.

About KPNQwest
KPNQwest (NASDAQ & ASE: KQIP) is a leading facilities-based, pan-European provider of data-centric services based on Internet Protocol (IP). It is deploying a technologically advanced 20,000 km fibre-optic network connecting 50 cities throughout Europe and provides a full portfolio of data-centric IP-based services and other advanced telecommunications services. KPNQwest is one of the largest business ISPs in Europe with operations in 15 countries. KPNQwest has thirteen CyberCenters and two regional mega-CyberCentres in operation with a third under construction, on its high-capacity fibre-optic network to provide web-hosting, application sharing and telehousing services. Website: www.kpnqwest.com

For further information, please contact:
Jerry Yohananov
Investor Relations - KPNQwest
Tel: +31 23 568 7602
Email: jerry.yohananov@kpnqwest.com

Piers Schreiber
Corporate Communications - KPNQwest
Tel: +31 23 568 7612
Email: piers.schreiber@kpnqwest.com

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This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by KPNQwest with the U.S. Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including failure to complete our network as planned and on time, failure of European internet use to increase as expected, significant competition, rapid technological change and adverse changes in the regulatory environment. This release may include analyst estimates and other information prepared by third parties, for which KPNQwest assumes no responsibility KPNQwest undertakes no obligation to review or confirm analyst expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. (end)