Moscow, Russia – August 10, 2009 – “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), 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.”