Moscow, Russian Federation – Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the largest mobile phone operator in Russia and the CIS, announces that it has acquired through an exchange of shares an 11.06% stake in COMSTAR – United TeleSystems (“COMSTAR-UTS” – LSE: CMST), a leading supplier of integrated telecommunication solutions in Russia and the CIS, and indirectly an additional 14.20% stake in OAO Moscow City Telephone Network (MGTS), Moscow’s incumbent fixed-line telecommunications operator.

Through a series of transactions, a group of investment funds have exchanged their joint 14.20% stake in the OAO Moscow City Telephone Network (MGTS) for 31,816,462 ordinary MTS shares1, representing 1.60% shares outstanding, previously held in treasury and $7.3 million in cash.  The MGTS stake, represented by 2,462,687 ordinary shares and 11,135,428 preferred shares, will be held by a wholly owned subsidiary of Comstar-UTS.  Simultaneously, MTS will receive 46,232,000 shares, representing 11.06% of total shares outstanding, of Comstar-UTS from MGTS Finance S.A., a wholly owned subsidiary of MGTS.  In addition, MTS will pay Comstar-UTS a cash consideration of $8.3 million.

The transaction allows MTS to increase its share in Comstar-UTS to 61.97%, while share of Comstar-UTS in MGTS will rise to 69.93%.

¹ Equal to RUB 7,171,430,534.80 based on the MICEX price on December 17, 2009, of 225.4 rubles per share per the terms of the agreement with MGTS shareholders.