Moscow, Russia – April 9, 2009 – “COMSTAR – United TeleSystems” OJSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Moscow and 69 Russian cities, today announced its unaudited consolidated US GAAP financial results for the fourth quarter and twelve months ended December 31, 2008.

Fourth quarter highlights

- Consolidated revenues of US$ 391.9 million  (up 8% year on year in rubles)
- Adjusted OIBDA  of US$ 163.9 million with adjusted OIBDA margin of 41.8%
- Net income of US$ 59.2 million
- Cash flow from operations of US$ 165.7 million
- Cash capital expenditure  of US$ 112.8 million
- Total assets of US$ 4.1 billion

Full year financial highlights

- Consolidated revenues of US$ 1,647.7 million (up 11%  year on year in rubles)
- Adjusted OIBDA of US$ 682.6 million with adjusted OIBDA margin of 41.4%
- Net income of US$ 179.6 million
- Cash flow from operations of US$ 593.6 million
- Cash capital expenditure of US$ 354.0 million – primarily related to modernization of MGTS last mile, digitalization of MGTS network and build-out of WiMax network in Moscow

Delivery of strategic goals

- Regional development:
- Commencement of integration of STREAM-TV Group regional operations, covering 40 Russian cities with a combined population of over 15 million people
- Acquisition of Interlink Group and Ural Telephone Company and consolidation of combined revenues of US$ 13.6 million since acquisition
- Launch of long distance service offering after build-out of proprietary DLD/ILD network
- Launch of national WiMax network in Armenia
- Group restructuring:
- Consolidation of 100% ownership of Comstar-Direct
- Legal merger of several subsidiaries with Comstar UTS, and of TNGS and RTC
- Further reduction in MGTS headcount from 13.4 thousand to 10.4 thousand during 2008
- Broadband development:
- Completion of modernization of MGTS last mile and increase in internet access speed for residential subscribers up to 24 megabits per second
- Completion of build-out of mobile WiMax network in Moscow
- Substantial growth in number of broadband subscribers in the regions

Sergey Pridantsev, President and Chief Executive Officer, commented: “2008 was another year of substantial progress for Comstar. Due to the execution of our long-term strategy and balanced financial policy we have ensured that we are as well positioned as possible in the current market environment. We have a stable and diversified customer base of residential and corporate subscribers and operators in Moscow, and our last mile access to 3.6 million MGTS connected homes in Moscow is now mirrored with STREAM-TV’s access to 3.6 million homes across the regions. The acquisition, consolidation and integration of STREAM-TV makes us the clear number one broadband operator and pay-TV provider in Russia. Furthermore, the launching of our long distance services establishes Comstar as a truly universal telecommunications provider.”

“We have continued to deliver on our key strategic objectives by expanding into the regions, building out our proprietary long distance network, simplifying our organizational structure by consolidating 100% of Comstar-Direct, merging our subsidiaries, further optimizing business processes at MGTS, and significantly enhancing our broadband offering by modernizing the MGTS network and launching internet access speeds of up to 24 megabits per second and HD TV services. These developments are now being supplemented by the creation of a unique user environment combining wireline and wireless services, through the launch of our WiMax network in Moscow and the extension of our ADSL broadband services.”

“Our primary focus moving forward into 2009 is to increase the utilization of our existing capacity, to enhance the quality of our services across all business segments, and to integrate STREAM-TV and our other regional operations into a single regional operating subsidiary.”

Irina Matveeva, Chief Financial Officer, added: “The Group’s performance in 2009 is impacted by a number of factors including the consolidation of STREAM-TV’s regional operations, the increase in our regulated and unregulated tariffs from the beginning of last month, and the effects of the economic downturn. It is too early to provide guidance for 2009 but, whilst Group revenue growth and margins will remain best in class by peer standards, although they will fluctuate between the quarters.”

“We are of course taking out cost over and above our longer term restructuring programmes, but are also mindful of protecting the medium and long term potential of the business.  We are focused on cash management and are therefore cancelling or postponing any non-essential expenses, but these savings are not immediate. We expect CAPEX levels to be much lower in 2009 at approximately 6% of Group revenues including maintenance CAPEX, investments in subscriber acquisition and up-selling, and selective regional development projects.”