Comstar Launches Long Term Incentive Programme for Executives

MOSCOW--(Business Wire)--
"COMSTAR - United TeleSystems" JSC ("Comstar" or "the Company")
(LSE: CMST), the leading combined telecommunications operator in
Russia and the CIS, today announced that its Board of Directors has
approved the introduction of a long-term incentive programme for the
Company's management team.

The programme is set to run from April 1, 2008 with a two year
vesting period. The programme participants are defined by the Board of
Directors every two years starting from the launch of the programme. A
total of 151 managers will participate in the scheme during 2008-2010,
including the Company's CEO and a wide range of parent and subsidiary
company management team members.

So-called 'phantom' share options are to be granted to
participants in the scheme. The programme participants will be
entitled to receive bonuses at the end of the two year period. The
bonus value will be calculated on the basis of the change in price of
the Comstar Global Depositary Receipt. The base price will be
calculated according to the trailing 60 day average trading price of
the Comstar GDR prior to the granting of the phantom options, whilst
the closing price will be calculated according to the trailing 60 day
average trading price of the Comstar GDR on the exercise date. A total
of 15,105,882 'phantom' share options, representing 3.6% of Comstar's
share capital, will be granted to 151 Comstar managers.

The bonuses will be received under the scheme, provided that
certain corporate performance criteria - Total Shareholder Return,
revenue growth, OIBDA profitability and market share increases - have
been achieved.

Yngve Redling, Chairman of the Compensation and Remuneration
Committee of the Board of Directors, commented: "The launch of this
long-term incentive programme for a large number of key employees is
intended to motivate our employees to implement the tasks aimed at
increasing Comstar's market value. We also intend to align executive
remuneration with shareholders' interests, creating a correlation
between remuneration levels and the GDR price. The objective is also
to maintain long-term relationships with those employees responsible
for implementing the most challenging and important tasks."

Under the terms of the new scheme, the granting of share options
and bonuses in the form of shares under the 2007-2009 programme, will
be discontinued. A total of 10 individuals currently have options
under the 2007-2009 scheme, which are exercisable in November 2008
over a combined total of 0.575% of the Company's share capital.
According to the decision of the Board of Directors, these individuals
will be able to sell the GDRs received under the option programme back
to Comstar. Comstar will continue to hold the 1,970,004 GDRs, which
were repurchased in the market for the share option programme between
October and December 2006, as an efficient financial investment.

Yngve Redling added: "Comstar's Compensation and Remuneration
Committee also recommended that the Shareholder Meeting should change
the currency of the exercise price for the participants in the
2007-2008 programme from Russian rubles to US dollars, in order to
align the strike price with the currency in which the GDRs are traded
on the London Stock Exchange and in which Comstar would repurchase the
GDRs if required to do so by the programme participants."

***

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

Comstar UTS is the leading fixed-line telecommunications company
in Moscow, both in terms of revenues and subscribers. Comstar UTS
provides voice, data, Internet, pay-TV and other value-added services
to residential and corporate subscribers and operators, using its
extensive backbone network and exclusive last mile access to 98% of
Moscow households. The Company also offers communications services in
five Russian regions and certain CIS countries. Comstar had 3.6
million residential subscribers in Moscow, 452,600 broadband internet
subscribers in Moscow, 108,600 corporate subscribers in Moscow, and
approximately 94,100 regional and international subscribers, as at
September 30, 2007. Comstar UTS reported operating revenues of US$
1,080 million and a 43% OIBDA margin for the nine months ended
September 30, 2007. Comstar GDRs are listed under the symbol "CMST" on
the London Stock Exchange.

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.

Comstar UTS
Masha Eliseeva
Tel: +7 985 997 0852
ir@comstar-uts.ru
or
Shared Value Limited
Matthew Hooper
Tel. +44 (0) 20 7321 5010
comstar@sharedvalue.net

Copyright Business Wire 2008