Comstar-UTS Announces the Acquisition of a Blocking Stake in Svyazinvest.

MOSCOW -- "COMSTAR - United TeleSystems" OJSC ("Comstar UTS" or "The Group") (LSE:CMST), the leading provider of integrated communications services in Moscow, today announced the acquisition of a blocking stake 25% plus one share in Telecommunication Investment Joint Stock Company (Svyazinvest) from Mustcom Limited for a total cash consideration of US$ 1.3 billion. In a series of transactions, Comstar UTS and MGTS Finance S.A., a company controlled by Comstar UTS, have acquired 4,879,584,306 ordinary shares of Svyazinvest, with Comstar UTS buying 3,378,173,750 shares, which represent 17.3% of total outstanding shares, and MGTS Finance S.A. purchasing 1,501,410,556 shares, representing 7.7% of total outstanding shares.

Simultaneously with the acquisition of the 25% stake plus one share in Svyazinvest, MGTS Finance S.A. and "2711 Centerville Cooperatief U.A." signed a put and call option agreement, which gives "2711 Centerville Cooperatief U.A." a right to purchase and sell 46,232,000 shares of Comstar - UTS, representing 11.06% of total outstanding shares, from MGTS Finance S.A. The call option acquired by "2711 Centerville Cooperatief U.A." may be exercised at a strike price of US$ 6.97 per share at any time following the signing of this agreement with respect to 10.5% of Comstar UTS' shares. The call option for the remaining 0.56% stake may be exercised beginning from April 01, 2007. The call option will expire one year from the date of signing of this agreement. "2711 Centerville Cooperatief U.A." may exercise its put option within two years from the date of exercising the call option at a strike price, which will be calculated based on a weighted average price of Comstar UTS GDRs during the period.

Sergei Shchebetov, Chairman of the Board of Directors of Comstar UTS and General Director of ZAO Sistema Telecom, commented: "The acquisition of a blocking stake in Svyazinvest is in line with our previously stated intention to use IPO proceeds for value accretive acquisitions. This is a strategic deal for both Comstar UTS and Sistema Telecom, which enables us to become a leading fixed-line operator in Russia and CIS".

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 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.