Moscow, Russia – December 27, 2007 – “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the leading integrated telecommunications operator in Russia and the CIS, today announced the merger of its 100% - owned subsidiary CJSC Central Telephone Company Contrast Telecom with the Moscow Region Branch.

This step is in line with the re-organization program of Comstar Group. The integration was approved by Comstar shareholders in December 2006. A new office of the Moscow Region Branch was opened in the city of Segiev Posad in lieu of the former subsidiary headquarters. Besides Contrast Telecom, there are two other alternative telecom operators – LLC Unitel and CJSC Port Telecom - in the Moscow Region, obviously a key business area, also 100% owned by Comstar. Both of them are expected to be included into the Moscow Region Branch before the end of 2008. Sergey Pridantsev, President of Comstar, commented:

«Integration of subsidiaries is another step toward reforming the Comstar Group. Our ultimate goal is to shape a clear-cut and transparent operating company performing well both for customers and shareholders. In the long run, all of our domestic subsidiaries will be consolidated into regional branches, so as to work in federal districts».