October 21, 2008

Comstar Launches National WiMAX Network in Armenia

"COMSTAR - United TeleSystems" JSC ("Comstar" or "the Group") (LSE: CMST), the largest integrated telecommunications provider in Moscow and 67 Russian cities, today announced that it has launched a wireless broadband network based on the 802.16e standard WiMAX technology in Armenia and introduced the "Comstar" brand in the local market.

The creation and commercial launch of the wireless network using the 3.6-3.8 GHz frequency range was implemented by Cornet-AM, an Internet service provider in Armenia, and a part of Comstar Group. The WiMAX network, which currently comprises 24 base stations, covers the capital of Armenia, Yerevan, as well as 18 Armenian cities. Airspan Networks (US) was chosen by Comstar as a provider of equipment for the WiMAX network. Base stations are connected via proprietary and rented fibre-optic lines, as well as through radio relay channels, with the backbone based on Cisco's equipment. The Group intends to expand the coverage zone and the backbone in the future. The total investments in the project amount to US$ 4.6 million in 2007-2008. The volume of further investments in the project will depend on the results of the launch and overall development of the telecommunications market.

Comstar's WiMAX network in Armenia is used to provide a broad range of telecommunications services, including digital telephony, broadband internet access, data transmission, conferencing and virtual private networks (VPN) for corporate subscribers. Cornet-AM currently provides services to corporate subscribers, and Comstar intends to start servicing residential subscribers and offer voice services in the future. Earlier this year, Cornet-AM applied to the Public Service Regulation Committee of the Republic of Armenia to obtain numbering capacity of 60 thousand telephone numbers. In addition, Cornet-AM has the license to provide inter-city and international connection services for its residential subscribers. Upon the receipt of the requested numbering capacity, Comstar will be able to provide the fixed-line local and long distance telecommunications services in a package with allocated telephone numbers.

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: "The national WiMAX network is a unique project for Armenia, and one of the first projects of its kind worldwide. The network deployment enables us to offer modern communications services in the country and helps to improve the life quality of its population. Some of the citizens will be offered telephony services and broadband internet access at their homes for the first time ever. The launch of this project enables us to truly become a national telecommunications operator in Armenia."

For further information, please visit www.comstar-uts.com.

Comstar UTS is the leading fixed-line telecommunications company in Moscow. Comstar provides voice, data, television and other value-added services to residential and corporate subscribers and operators, using its extensive backbone network and exclusive last mile access to 97% of Moscow households. The Company also offers communications services in five Russian regions, Armenia and Ukraine. Comstar had 3.6 million residential subscribers and 783 thousand residential broadband internet subscribers in Moscow, as well as 49 thousand residential regional and international broadband internet subscribers at the end of June 2008. Comstar generated US$ 834.2 million of revenues and a 39.5% OIBDA margin for the six months ended June 30, 2008. Comstar's Global Depositary Receipts are listed on the London Stock Exchange (ticker: CMST).

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Comstar UTS. You can identify forward looking statements by terms such as "expect,""believe,""anticipate,""estimate,""intend,""will,""could,""may" or "might", the negative of such terms or other similar expressions. Comstar UTS wishes to caution that these statements are only predictions, and that actual events or results may differ materially. Comstar UTS does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Comstar UTS, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries Comstar UTS operates in, as well as many other risks specifically related to Comstar UTS and its operations.