Moscow, Russia – February 16, 2010– “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications service provider in Moscow and 69 Russian cities, today announced that it has completed the acquisition of 100% of Tenzor Telecom LLC in Yaroslavl in Central Russia for RUB 220 million (approximately US$ 7.3 million[1]). At the time of acquisition, Tenzor Telecom had a net debt of RUB 32.7 million, and the deal was made at a 2009 EV/OIBDA multiple of 4.65x.

Tenzor Telecom is the leading alternative telecommunications operator and the second largest internet service provider in the city of Yaroslavl, which has more than 600 thousand inhabitants[2]. Tenzor Telecom offers fixed line broadband internet access via Ethernet connection, telephony services including local and zonal telephone connections, and channel leasing.

Tenzor Telecom has over 23 thousand subscribers, of which approximately 22 thousand are residential customers and 1.1 thousand are corporate clients. Tenzor Telecom’s proprietary modern backbone network comprises a 170 km fibre-optic network with a 280 km distribution network. The company also has licenses to offer local and zonal telephony services, communication channel offerings, telematic communication services and information transfer services

Sergey Pridantsev, President and Chief Executive Officer of Comstar-UTS, commented: “We are consistently executing on our expansion programme in the local markets that we have identified and prioritised across Russia. We had extended our footprint to 70 Russian cities, and our objective is now to increase the total amount of cities where we are present to 200 by entering cities with populations of more than 100,000 people. At the same time, we are continuing to reorganise our regional businesses to create a unified, transparent and efficient operating structure. Yaroslavl is indicative of the type of city that we are targeting – a large city in the economically developed Central Federal District, where there is a clear demand for our fixed line telecommunications services. As a market leader with modern technology and a growing customer base, Tenzor Telecom is just the type and profile of business that we are looking to acquire.”

Viktor Koresh, vice-president for regional development of Comstar-UTS, added: “Tenzor Telecom has demonstrated a strong development for many years, especially in the Internet access market. The Company is very well positioned on the Yaroslavl telecommunications market, has a strong infrastructure and potential for further growth. We plan to continue to develop not only telephone and Internet access services, but also cable-TV services, for which we already expect considerable demand in the city. We also do not exclude the possibility of entering the markets in neighbouring cities in the Yaroslavl region.”

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1Bank of Russia’s US$-RUB exchange rate as at February 15, 2010

2Market analysis data from IKS-Consulting