Comstar-UTS Announces Re-Organization of Its Alternative Telecom Operations.

MOSCOW -- "COMSTAR - United TeleSystems" JSC ("Comstar UTS" or "The Group") (LSE: CMST), the leading provider of integrated communications services in Russia and the CIS, today announced that the Extraordinary General Meeting of Shareholders of Comstar UTS, held on December 25, 2006, approved the merger of its 100% - owned subsidiaries Telmos, MTU-Inform, CTC Contrast-Telecom and M-Telecom Holding (100% owner of Astelit) with Comstar UTS.

Eric Franke, Chief Executive Officer of Comstar - United TeleSystems, commented: "The integration of alternative telecom operations into Comstar UTS will facilitate the optimization of the Group's legal structure. This step is in line with the re-organization program of Comstar UTS, which was announced in October of 2006".

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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 3.6 million subscribers in its traditional segment of the business, 477.3 thousand subscribers in its alternative segment in Moscow and 92.2 thousand subscriber in its alternative segment in the regions at September 30, 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 consolidated operating revenues of US$ 828.2 million for the nine months of 2006 and Comstar UTS' consolidated assets totalled US$ 2.8 billion at September 30, 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.