COMSTAR Merges Seven Regional Subsidiaries into CJSC Comstar-Regions and Branch Network

MOSCOW--(BUSINESS WIRE)--“COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST.L), the largest integrated telecommunications provider in Moscow and 69 Russian cities, today announced that it has completed the first stage of the reorganization of its regional business through the merger of seven of its largest subsidiaries into CJSC Comstar-Regions, which is 100% owned by Comstar and will serve as a centre for consolidation of the Group’s regional assets.

Comstar-Regions was legally registered on August 3, 2009, and consists of CJSC STREAM-TV, owner of several subsidiaries and branches in Russia’s regions, CJSC Digital Telephone Networks South in Rostov-on-Don, CJSC Strategia in Yekaterinburg, which owns CJSC Ural Telephone Company, CJSC Intersvyaz-Service,

CJSC Inter-TV Media, a provider of communications services in Ryazan and owner of Interlink Group, CJSC Teleradiotechnika in Smolensk, and CJSC Sandy Service in Nizhny Novgorod.

Comstar-Regions comprises branches in the Central, North-West, Southern, Volga, Ural and Siberian Federal Districts, with corresponding centers in Moscow, St. Petersburg, Rostov-on-Don, Saratov, Yekaterinburg and Tyumen.

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: “We continue to execute on all of our previously set strategic goals to restructure the business and create a unified efficient operating company offering telecommunications services on a national basis. The challenge now is not only to unite these assets into Comstar-Regions, but also to gradually switch to a unified system of operations for offering services in all of our regions, whilst maintaining a maximum level of comfort for both our clients and subsidiaries. Our subscribers should be the first ones to feel the main benefit of the restructuring of our regional business.”

Viktor Koresh, Vice President for the Regional Development, added: “Our remaining assets will be also merged into Comstar-Regions when they are ready to be reorganized, as these companies have to adhere to a set of corporate requirements both from a legal perspective and in terms of business practices. The result of the current reorganization will be a more transparent and efficient business structure, which will allow us to continue our successful development going forward.”

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

Comstar-UTS is the leading fixed-line telecommunications company in Moscow. Comstar provides voice, data, television and other value-added services to residential and corporate subscribers and operators, using its extensive backbone network and exclusive last mile access to 97% of Moscow households. The Company also offers communications services in five Russian regions, Armenia and Ukraine. Comstar had 3.6 million residential subscribers and 795 thousand residential broadband internet subscribers in Moscow, as well as 310 thousand residential regional and international broadband internet subscribers and 1.9 million residential regional pay-TV subscribers at the end of March 2009. Comstar generated US$ 334.4 million of revenues and a 37.8% OIBDA margin for the three months ended March 31, 2009. Comstar’s Global Depositary Receipts are listed on the London Stock Exchange (ticker: 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 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.

Comstar UTS
Masha Eliseeva
Tel: +7 985 997 0852
ir@comstar-uts.ru
or
Shared Value Limited
Matthew Hooper
Tel. +44 (0) 20 7321 5010
comstar@sharedvalue.net