Moscow, Russia - March 16, 2006 - COMSTAR - United TeleSystems (Comstar UTS), announced the acquisition of a 100% stake in Unitel for a total cash consideration of US$ 4.8 million. Unitel is an alternative wireless fixed-line telecommunications company serving customers in the Moscow region.

The acquisition of Unitel reflects the Comstar UTS strategy to expand its operations in the Moscow region and is intended to be the platform for the expansion of the existing business in this key geographical area. Given the high growth potential of the Moscow region, its rapid development and the high penetration of telecommunications services, the acquired assets are planned to be placed under the independent management of Comstar's Moscow regional subsidiary, which was established late last year.

Founded in 1996, Unitel provides local telephony, dedicated and dial-up Internet access, establishes ?1 telecommunication lines for housing estates, newly-built residential compounds, administrative and apartment blocks in the Moscow province. The company operates in many administrative areas within the Moscow region, namely: Khimkynsky, Krasnogorsky, Solnechnogorsky, Dmitrovsky, Mytishinsky, Pushkinsky, Istrinsky, Odintsovsky, Leninsky, Nasrofomisnksy and Podolsky. The Company has 2,600 subscribers, which principally consist of residential users living outside Moscow.  The Company's consolidated revenues for 2004 amounted to more than US$ 3.4 million and it generated US$ 1.1 million of EBITDA.  

In parallel to the active expansion of its backbone network in 14 towns in the Moscow Region, Comstar UTS is constructing a radio relay network in the Moscow region, using base stations with wireless broadband access.  Unitel's infrastructure and radio frequency capacity will assist this expansion by Comstar UTS of its relay backbone and wireless broadband access network in the Moscow region.

Comstar UTS expects to achieve 100% coverage of the region following the completion of the construction of the base stations in 2006 and the integration of the Unitel network.

Semyon Rabovsky, CEO of Comstar UTS, commented: "This acquisition and development of Unitel is in line with Comstar UTS's strategic plans to develop our operations in the region, in terms of both the applied technology and targeted customer segments.  The reason for this purchase is that Unitel has a steady and high quality customer base, a broad geographical coverage in the Moscow region, as well as an extensive wireless network with assigned radio frequency capacity."  

Comstar UTS is a leading provider of integrated communications services in Moscow and the Moscow region in terms of revenues and subscribers and also offers communications services in other regions of Russia and the Commonwealth of Independent States.  Comstar UTS had over 4 million subscribers at September 30, 2005.  Comstar UTS offers voice, data and Internet, pay-TV and various value-added services to corporate, operator and residential subscribers, using its alternative and traditional fixed-line networks.  Comstar UTS had combined operating revenues of US$ 636.8 million for the first nine months of 2005 and Comstar UTS' assets totalled US$ 1.56 billion at September 30, 2005.  Comstar UTS ordinary shares are listed on the Moscow Stock Exchange and on the London Stock Exchange under the symbol "CMST".