COMSTAR UTS Expansion into Ukrainian Market.

MOSCOW -- "COMSTAR - United TeleSystems" ("Comstar UTS") (LSE:CMST), the leading provider of integrated communications services in Moscow, today announced that it has signed an agreement with Neotel, its Ukrainian partner, to expand its presence in the Ukrainian fixed-line market. Comstar UTS plans to build a proprietary NGN (MPLS) multi-service network and form an extensive presence in the country through further selective value added acquisitions.

TVT Ukraine, a subsidiary of Comstar UTS, will be renamed Comstar Ukraine and will serve as a base for the development of Comstar UTS operations in the country. Comstar UTS intends to offer digital telephony and broadband services (IP-TV, home theatre, etc.) to its corporate and private clients through an NGN network of around 135 thousand ports. Comstar UTS plans to invest over US$ 10 million in the development of its business in Ukraine in 2006.

Semyon Rabovsky, CEO of Comstar UTS, commented: "We are pleased to announce our strategic plans to expand our business activities in Ukraine. We believe the current economic environment and high potential in both fixed-line telephony and broadband services offer attractive growth opportunities for our business in this country. Infrastructure-based expansion, i.e. the creation of a wide NGN network covering the largest Ukrainian cities, will become a core principle of our planned activities."

For further information, please visit www.comstar-uts.com

Comstar UTS is a leading provider of integrated communications services in Moscow and the Moscow region in terms of revenues and subscribers and also offers communications services in other regions of Russia and the Commonwealth of Independent States. Comstar UTS had 4.2 million subscribers at December 31, 2005. Comstar UTS offers voice, data and Internet, pay-TV and various value-added services to corporate, operator and residential subscribers, using its alternative and traditional fixed-line networks. Comstar UTS had combined operating revenues of US$ 907.6 million for the full year 2005 and Comstar UTS' assets totalled US$ 1.64 billion at December 31, 2005. Comstar UTS ordinary shares are listed on the Moscow Stock Exchange and on the London Stock Exchange under the symbol "CMST".

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Comstar UTS. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. Comstar UTS wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Comstar UTS does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Comstar UTS, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries Comstar UTS operates in, as well as many other risks specifically related to Comstar UTS and its operations.