Moscow, Russia – June 5, 2008 – “COMSTAR – United TeleSystems” OJSC (“Comstar” or “the Group”) (LSE: CMST), the leading integrated telecommunications operator in Russia and the CIS, today announced its unaudited consolidated US GAAP financial results for the three months ended March 31, 2008.


FINANCIAL HIGHLIGHTS

•    Consolidated revenues up 27% year on year to US$ 417.0 million
•    OIBDA  up 31% year on year to US$ 170.3 million, with an increased margin of 40.8%
•    Operating income up 31% year on year to US$ 121.3 million, with an increased margin of 29.1%
•    Net income up to US$ 54.1 million
•    Cash flow from operations up 67% year on year to US$ 148.4 million
•    Total assets up 35% year on year to US$ 4.97 billion
•    Cash capital expenditure  of US$ 43.4 or 10.4% of revenues


OPERATING HIGHLIGHTS

•    108 thousand new broadband internet subscribers added in Russia – up 80% year on year and 14% quarter on quarter – with total base reaching 850 thousand users
•    Moscow residential broadband internet subscriber base up 77% year on year and 15% quarter on quarter to 750 thousand including 134 thousand triple-play (voice + broadband internet + pay-TV) subscribers
•    Regional residential broadband internet subscriber base up twenty times year on year and 19% quarter on quarter to 40 thousand, regional pay-TV subscriber base increased to 107 thousand
•    51% of MGTS residential subscribers on unlimited tariff plan at end of period
•    11% of MGTS corporate subscribers on unlimited tariff plan by end of April
•    Completion of Long Distance network build-out in February 2008
 
Sergey Pridantsev, President and Chief Executive Officer, commented: “These results demonstrate our continued delivery of consistent steps in line with our five point strategy. We completed the registration of our long-distance network in mid-May, having completed the build-out in February.  We have started marketing these new services to our corporate subscribers.  Not only does this development significantly enhance our competitive position but it will also generate additional revenues for us.

We have also continued to explore opportunities to develop our networks and increase efficiency levels further.  The testing of IMS technology in Moscow provides the potential to accelerate the provision of multi-service solutions, and also enables targeted marketing to subcriber homes whilst, at the same time, improving Group profitability levels. We have continued to expand in the regions, both through M&A transactions such as this week’s acquisition of the leading CLEC in Ryazan, as well as through infrastructure development in the Moscow and other regions, and in close cooperation with our sister companies in the Sistema Group.  We have strengthened our market positions in the CIS countries where we operate, with the deployment of a national WiMax network in Armenia and the launch of double-play services for subscribers in Odessa in Ukraine.”

Irina Matveeva, Chief Financial Officer, added: “Our revenue growth in the first quarter was primarily driven by continuing high customer demand for MGTS’ unlimited tariff plan, the growing proportion of regional revenues, and increasing fixed to mobile traffic. Our profitability was supported by the significant enhancement of the alternative segment’s margins in both Moscow and the regions. These results support our previously provided guidance for 2008.”