Moscow, Russia – October 8, 2007 - “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Company”) (LSE: CMST), the leading combined telecommunications operator in Russia and the CIS, today announced that it has launched an integrated programme of modernization of the Group companies’ networks, in order to reduce investment and operational costs associated with servicing the infrastructure, as well as to increase its capacity.

Comstar plans to integrate existing NGN networks of MGTS and Comstar UTS in a gradual process, as well as to increase traffic capacity of the backbone networks of MGTS and Comstar Direct. The integration project is expected to help the Group to avoid duplication of investments into the development of two networks and to generate cost savings associated with modernization of the Group’s network in the next few years.

The Group has completed the upgrade of MGTS’ backbone network to 40 Gbps. This will enable Comstar UTS to offer its customers a high quality connection and to reduce the connection time for new subscribers of STREAM and MGTS. The Group has also upgraded Comstar Direct’s backbone network, resulting in the increase of its capacity from 20 Gbps to 40 Gbps.

Alexander Kirillov, Chief Technology Officer of Comstar UTS, commented: “The complete integration of MGTS’ and Comstar Direct’ networks will result in increased capacity of the combined infrastructure and therefore will allow us to enhance the Company’s broadband offering and improve the quality of our services. We plan to manage the combined network and launch a programme of MGTS’ “last mile” modernization.”