Moscow, Russia – November 16, 2010 – “COMSTAR – United TeleSystems” OJSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Moscow and 83 Russian cities, today announced its unaudited consolidated US GAAP financial results for the third quarter and nine months ended September 30, 2010.

Third quarter highlights

• Consolidated revenues up 7% year on year in ruble terms to US$ 410.5 million
• Adjusted OIBDA of US$ 170.6 million - up 9% year on year in ruble terms when excluding the previously accrued expenses for the cancelled 2008 phantom option programme from the financial results for 3Q2009
• Adjusted OIBDA margin of 41.5% (compared to 40.6% in 3Q2009 when excluding the previously accrued phantom option expenses)
• Adjusted net income attributable to Comstar-UTS shareholders more than doubled year on year in ruble terms to US$ 58.1 million (when excluding the previously accrued phantom option expenses from the financial results for 3Q2009)
• Cash and cash equivalents and short term investments more than doubled year on year in ruble terms to US$ 623.3 million
• Cash flow from operations of US$ 114.6 million
• Cash capital expenditure of US$ 55.8 million represented 13.7% of consolidated revenues in ruble terms
• Free cash flow of US$ 58.8 million
• Total broadband subscriber base up 20% year on year to 1.5 million
• Domestic long distance and international long distance traffic volumes up 66% year on year to 188.5 million minutes, with DLD/ILD consolidated revenues of US$ 21.3 million NINE MONTH HIGHLIGHTS
• Consolidated revenues up 7% year on year in ruble terms to US$ 1,228.6 million
• Adjusted OIBDA of US$ 494.8 million - up 7% year on year in ruble terms when excluding the previously accrued expenses for the cancelled 2008 phantom option programme from the financial results for the first nine months of 2009 and the first quarter of 2010
• Adjusted OIBDA margin of 40.2% (compared to 40.1% for the first nine months of 2009 when excluding the previously accrued phantom option expenses from the financial results for the first nine months of 2009 and first quarter of 2010)
• Adjusted net income attributable to Comstar-UTS more than doubled year on year in ruble terms to US$ 153.0 million (when excluding the previously accrued phantom option expenses from the financial results for the first nine months of 2009 and 1Q2010)
• Cash flow from operations of US$ 352.3 million
• Free cash flow of US$ 239.2 million
• Cash capital expenditure of US$ 113.1 million represented 9.3% of consolidated revenues in ruble terms

Key strategic developments in the third quarter

• Completion of series of transactions with OJSC Rostelecom involving the sale of Comstar’s 25% + 1 share stake in Svyazinvest to Rostelecom for RUR 26.0 billion
• Use of proceeds for early repayment of Sberbank credit facility and outstanding interest
• Voluntary Tender Offer (“VTO”) by Mobile TeleSystems OJSC (“MTS”) to acquire 9% of the issued share capital of Comstar expired on September 21, 2010 and MTS’ shareholding in Comstar consequently increased from 61.97 % to 70.97% (73.33% when excluding treasury shares)
• Standard & Poor’s Ratings Services revised its outlooks for Comstar and MGTS from Stable to Positive, and confirmed its “BB” long term corporate credit rating and “ruAA” Russia national rating for each company, in order to reflect a corresponding upgrade to its outlook for MTS
• MGTS continued the digitalization process of its telephone network and management expects the digitalization level in the MGTS network to increase up to 69% at the end of the year, compared to 63% at the beginning of the year
• Commenced organic rebranding of Comstar’s regional operations and launched first MTS-branded products in the regions

Sergey Pridantsev, President and Chief Executive Officer, commented: “We remain focused on the execution of our strategy and successfully completed the restructuring of our ownership in Svyazinvest during the third quarter by selling our stake to Rostelecom. The cash proceeds of the sale were used to repay our debt to Sberbank and we are now in a net cash position.”

“The process of integration with our majority shareholder has continued as MTS completed its voluntary tender offer and increased its shareholding in Comstar to over 70%. The rebranding is underway and we are launching a number of convergent service offerings and customer services solutions in both Moscow and the regions.”

“Overall, our total number of broadband internet subscribers in Russia grew by 20% year on year in the third quarter. Our broadband subscriber base in the Russian regions grew by 51% year on year to 519,000, whilst our broadband subscriber base in the mature Moscow market grew by 7% to 872 thousand subscribers, following a 48% year on year increase in the number of mass market subscribers. In addition, one third of all MGTS subscribers in Moscow are now utilising our DLD/ILD services. The modernisation of MGTS’ network in Moscow is ongoing and 310,000 numbers will have been digitalised by the end of the year. Our goal remains to complete the digitalisation of the network by the end of 2013. We have also continued to modernise our regional networks, in order to enable us to offer broadband services to our pay-TV subscribers, and to review opportunities to further expand our market presence.”

Alexey Kaurov, Chief Financial Officer, added: “Our primary performance indicators continued to grow in line with our expectations in the third quarter, and we are on track to deliver on our targets for the full year. Our consolidated revenues were up 7% year on year in the quarter and for the year to date in ruble terms, while our adjusted OIBDA margin increased to 41.5% in the quarter and 40.2% for the year to date. Our capital expenditure amounted to 13.7% of Group revenues in the quarter and 9.3% for the year to date, and we have continued to optimise our CAPEX levels by realising synergies from our ongoing integration into MTS.”