Moscow, Russia – October 15, 2008 – “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Moscow and 67 Russian cities, today announced its intention to commence the introduction of IP Multimedia Subsystem (IMS) technology in Moscow in 2009. The introduction of IMS will enable the Group to reduce the investments in the MGTS digitalization, drive the increase in the broadband subscriber base in the mass segment, and offer a broad range of value-added telecommunications services for broadband subscribers in the premium segment.

Within the framework of the project, Comstar intends to install around 2 million gateways on the analogue part of the MGTS network over the next 3 years. The introduction of the technology will assist the Group in switching from analogue system to more up-to-date technology, omitting the stages of Time-Division Multiplexing (TDM) and Next Generation Networking (NGN). It will also allow the Group to reduce the capital expenditure by 30% compared to the volume of investments required for switching from analogue to NGN technology combined with broadband solution.

Comstar has already launched an IMS test zone with the support of the MGTS Centre for New Technologies Deployment in Moscow. The testing of equipment from various providers is expected to be completed by the end of 2008. The preparation of the network design based on IMS architecture is being currently implemented.

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: “We are introducing the most innovative solutions on our network which will allow us to reduce capital expenditure and significantly increase the quality of services provided to our clients. The introduction of IMS will enable us to increase broadband subscriber acquisition levels in the mass segment, provide any type of multimedia and telecommunications services in the premium segment in a more efficient manner, and to implement digitalization of the MGTS network in the most optimal way. We are keeping pace with the leading international telecommunications operators who have chosen the advanced IMS technology.”

Alexander Kirillov, Chief Technology Officer of Comstar UTS, added: “IMS is the framework which offers the most modern approach to network architecture, providing subscribers with an ability to independently create their preferred service packages. IMS serves as a platform for the efficient launch of new types of default services which are switched on at the subscriber’s request. IMS architecture supports new generation IP-based transport, does not depend on the subscriber connection type and can be used on both ADSL and Ethernet networks. It is a unified infrustructure for all types of services and platforms which provides immense opportunities for implementing convergent projects.”