Comstar-United Telesystems OJSC Financial Results For 2008

MOSCOW, Russia — “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.

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.”

Broadband in Moscow

The number of double-play (internet & pay-TV) subscribers increased by 19% year on year to 145 thousand and was down by 1% quarter on quarter due to the optimization of subscriber spending on telecom services reflected in a slowdown in demand for value-added services during the fourth quarter of 2008.

Comstar completed the consolidation of a 100% stake in ZAO Comstar-Direct on December 30, 2008. Under the terms of the agreement, Comstar assumed management control of the the part of Comstar-Direct that provides multi-media services (broadband internet access and pay-TV) and its subscriber base.

Broadband in the Regions

The number of pay-TV subscribers in the regions grew by 3% quarter on quarter to 153 thousand customers due to the increased attractiveness of pay-TV services compared to more expensive kind of entertainment.

STREAM-TV’s pay-TV subscriber base increased by 10% year on year in the fourth quarter of 2008 to 1.8 million, including 1.4 million cable-TV subscribers and 390 thousand ‘social tariff’ TV subscribers.

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