Moscow, Russia – June 15, 2010 – “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Group”) (LSE: CMST), the largest integrated telecommunications provider in Russia and the CIS, and a majority-owned subsidiary of MTS Group, today announced that its fully-owned subsidiary, Comstar-Regions, has completed the acquisition of 100% of Penza Telecommunications CJSC (“Penza Telecom”) for a total cash consideration of RUB 630 million (approximately US$ 19.9 million^[1]), following approval by the Federal Antimonopoly Service on May 20, 2010. Comstar will assume RUB 43.8 million of Penza Telecom net debt as a result of the acquisition.

Penza Telecom is the leading alternative telecommunications operator in the Penza telecoms market, and the leading internet and pay-TV services provider in the cities of Penza and Zarechye. Penza Telecom offers 100 Mbps fixed line broadband internet access, a pay-TV service package of 80 channels, and channel leasing services. Penza Telecom had 47,000 broadband, 42,000 pay-TV and 1,500 telephony services subscribers at the end of the first quarter of 2010. Penza Telecom has a 53% share of the broadband market and a 38% share of the pay-TV market in Penza and Zarechye, based on its own estimates. The company’s revenues were up 40% year on year to RUB 242 million with an OIBDA margin of 34% for the full year 2009.

The acquisition of Penza Telecom is in line with the regional development strategy of MTS and Comstar. Comstar’s priority is to continue to modernise its telecommunications networks in Moscow and other Russian cities. MTS has only recently entered the Penza region and it therefore makes sense for Comstar to acquire Penza Telecom.

Viktor Koresh, Vice President for Regional Development at Comstar UTS,, commented: “As in the other cities where we operate, we will modernize the fixed line networks in both Penza and Zarechye, launch convergent service offerings and introduce new tariff plans. We believe there will be a high level of demand for our new services in this region.”

^[1]The Bank of Russia exchange rate 31.7302 Rubles (RUB) per US$ 1 as at 10.06.2010.