Comstar Broadband Internet Subscriber Base in Russia up 14% In The First Quarter

Monday, April 28th, 2008 

MOSCOW, Russia — “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Company”) (LSE: CMST), the leading integrated telecommunications operator in Russia and the CIS, today announced that its broadband internet subscriber base in Russia had reached 848,000 users by the end of first quarter of 2008, reflecting a 14% growth in comparison with 743,000 at the end of 2007. More than 105,000 net new subscribers therefore were added in the first quarter of 2008.

In Moscow Comstar’s broadband internet subscriber base had exceeded 796,000 users by the end of March 2008, which is 15% more than at the end of 2007. The 750,000 residential subscribers accounted for 94% of Comstar’s broadband subscriber base in Moscow. Internet connection speeds of 1 Megabit per second or above were used by 90% of the total residential subscriber base in Moscow.

Comstar’s broadband internet subscriber base in the regions totalled 52,000 users by the end of the quarter, up 8% since the end of the year.

The total number of pay-TV subscribers in Russia increased by 8% to 241,000 subscribers by the end of the quarter, including 130,000 in Moscow, an increase from 122,000 at the end of 2007. The number of regional pay-TV subscribers therefore increased from 102,000 to 111,000 during the period.

Comstar Group has continued to implement its marketing campaigns in order to attract new customers and to improve its service quality further.

Sergey Pridantsev, President and Chief Executive Officer of Comstar, commented: “Comstar continues to strengthen its position in Moscow and regional broadband markets. We plan to increase our subscriber base in Moscow to one million by the end of 2008 and reach a 50% share of the Moscow broadband market by the end of 2011. The subscriber base is growing strongly in the regions due to the development of networks and the introduction of new services. We expect the broadband subscriber base in the regions to exceed 100,000 users by the end of 2008”.

Sergey Nazarov, Vice President for Marketing of Comstar, added: “Our leading position in the Moscow broadband internet market is confirmed by a number of independent research reports by key analysts. According to J’Son&Partners, Comstar had increased its market share in Moscow to 35.7% at the end of the first quarter of 2008 from 34.3% at the end of 2007. However, it is not only important to increase the subscriber base, but also to retain customers. We have therefore introduced new customer services such as Internet portal “STREAM24″, and we are also planning to introduce programmes to further increase customer loyalty. New tariff plans for high-speed internet access and HDTV services will be launched in the coming month”.