Comstar UTS Finalized Digitalization of Its Subsidiary in Tyumen Region.

MOSCOW -- "COMSTAR - United TeleSystems" OJSC ("Comstar UTS") (LSE:CMST), the leading provider of integrated communications services in Moscow, today announced that it has completed the modernization of the network of Tyumenneftegazsvyaz OOO (TNGS), one of its subsidiaries. In August 2006, TNGS replaced its two last analogue switching stations with a digital station with the capacity of 960 ports, facilitating 100% digitalization. The total cost of the project was US$1.2 million.

TNGS is the leading alternative operator in the autonomous district of Khanty Mansi, with its own telecommunication infrastructure located in the autonomous district of Yamalo Nenets, 10 cities and 12 townships in the Tyumen region. Over the last several years TNGS has replaced 43 "Kvant" switching stations with the digital equipment SI-2000, thereby increasing the installed capacity to over 60 thousand telephone lines.

TNGS' subscribers will be provided with all the advantages of digital telecommunication technology - quality and speed of digital connection, the ability to connect to the ISDN network, and a wide range of additional services, including protection from unauthorized connection, immediate diversion to any number, hold call service, tone calling, multislot number and videophony.

Eric Franke, Chief Executive Officer of Comstar UTS, commented: <<We see full digitalization of TNGS as a logical step in the modernization and development of our subsidiaries. The successful and timely implementation of this project will allow TNGS to gain substantial competitive advantages in the local market>>.

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 4.9 million subscribers at June 31, 2006. 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$ 249.8 million for the first three months of 2006 and Comstar UTS' assets totalled US$ 2.67 billion at March 31, 2006. 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.