Moscow, Russia – November 27, 2008 – “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Moscow and 67 Russian cities, today announced that the transfer of rights in relation to the previously announced exercising of the put option held by Access Telecommunications Coöperatief U.A. (“Access”) was completed on November 26, 2008. Comstar subsidiary MGTS Finance S.A.  thereby acquired 46,232,000 Comstar shares, which represent 11.062% of Comstar’s total issued ordinary shares.

The shares were acquired for US$ 10.03 per share and a total cash consideration of US$ 463.6 million. US$ 100.0 million of the consideration has been paid to Access on November 26, 2008, simultaneously with the transfer of rights in relation to the put option.  The option shares will be pledged to Access until January 26, 2009 as collateral and guarantees will be provided to Access for the period up until the final payment on March 26, 2009. 

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: “The exercising of this put option will remove the volatility in our income statement, which has arisen from the quarterly revaluation of the option instrument. We have the necessary funds available to fulfill our obligations under the agreement and we are paying the consideration in installments in order to smooth our cash outflows. The acquired shares will be accounted for as repurchased shares until a decision has been taken on the future use of these shares.”

The call and put option was originally issued by Comstar subsidiary MGTS Finance S.A. to 2711 Centerville Cooperatief U.A. in part payment for the acquisition of a 25% + 1 share stake in Telecommunication Investment Joint Stock Company ‘Svyazinvest’ in December 2006. The transfer of rights and receipt of payment in relation to the exercising of the call option by Access was completed on December 18, 2007. Access thereby became a shareholder in Comstar by acquiring 46,232,000 Comstar shares or 11.062% of the total number of ordinary Comstar shares in issue from MGTS Finance S.A. for      US$ 6.97 per share and a total cash consideration of US$ 322.2 million.

The put option has been revalued at the end of each quarter, with changes in the valuation for the three-month periods reflected in the Group’s income statements. The final valuation of the put option was, therefore, made on the date on which the application was filed for the exercising of the put option, and ceases to impact on the Group’s accounts from that date. The revaluation of the put option resulted in a non-cash loss of US$ 45.5 million in the third quarter of 2008 and US$ 27.9 million for the first nine months of 2008, compared to non-cash losses in the amount of US$ 186.2 million and US$ 212.2 million for the corresponding periods of 2007. MGTS’ 44% minority interest in the revaluation reduced the total net impact of the instrument on the Group’s net income to US$ 25.4 million loss in the third quarter of 2008 and US$ 15.6 million for the first nine months of 2008.