REG-Comstar UTS Statement re: Comstar -- United Telesystems OJSC Financial Results for the Fourth Quarter and Full Year 2007

Statement re: Comstar -- United Telesystems OJSC Financial Results for the Fourth Quarter and Full Year 2007

MOSCOW--(Business Wire)--

"COMSTAR - United TeleSystems" OJSC ("Comstar" or "the Group") (LSE:CMST), the
leading integrated telecommunications operator in Russia and the CIS, today
announced its unaudited consolidated US GAAP financial results for the fourth
quarter and twelve months ended December 31, 2007.

FULL YEAR FINANCIAL HIGHLIGHTS

-- Consolidated revenues up 39% year on year to US$ 1,562.4 million

-- OIBDA up 55% year on year to US$ 663.2 million (excluding US$ 62.1
million stock bonus awards in Q42006) with increased margin of 42.5%

-- Operating income of US$ 485.3 million with increased margin of 31.1%

-- Net income of US$ 43.8 million

-- Cash CAPEX(1) up 13% year on year to US$ 345.4 million

-- Cash flow from operations up 40% year on year to US$ 488.4 million
(excluding stock bonus awards in Q4 2006)

-- Total assets up 31% year on year to US$ 4.6 billion

FOURTH QUARTER FINANCIAL HIGHLIGHTS

-- Consolidated revenues up 65% year on year to US$ 482.1 million

-- OIBDA more than doubled year on year to US$ 200.0 million (excluding US$
62.1 million stock bonus awards in Q42006) with increased margin of
41.5%

-- Operating income of US$ 139.2 million with increased margin of 28.9%

-- Net income of US$ 51.8 million

-- Cash flow from operations up 46% year on year to US$ 153.4 million
(excluding stock bonus awards in Q4 2006)

FOURTH QUARTER OPERATING HIGHLIGHTS

-- 81% year on year growth in Moscow residential broadband internet
subscriber base to 651,000, including 122,300 triple-play (voice +
broadband internet + pay-TV) subscribers, and ARPU of US$ 17.5

-- 32,900 regional residential broadband internet subscribers and 102,200
regional residential pay-TV subscribers

-- 51% of MGTS residential subscribers on unlimited tariff plan at year end

-- Acquisition of Digital Telephone Networks and Regional Technical Centre
with consolidation of combined full year 2007 revenues of US$ 80.6
million

-- Ground-breaking agreement to build wireless WIMAX network in Moscow

-- Completion of Long Distance network build-out in February 2008

Sergey Pridantsev, President and Chief Executive Officer, commented: "We are
pleased to report a healthy set of results, which reflect a number of positive
changes that we made during 2007. Comstar has now successfully restructured a
group of diverse companies into a single, efficient and integrated operator that
is fit to compete in the global telecommunications marketplace. We are already
the largest and the most profitable fixed-line telecommunications operator in
Russia.

"We have developed, and begun to implement, a long-term and highly proactive
five point strategy, which is centred around Broadband development, Regional
expansion, MGTS, Group structure and Svyazinvest, and which underlines the fact
that we are on the competitive offensive in the market place with a unique
offering of bundled communications services. We have already achieved a number
of important operating and financial milestones during 2007. The strategic
objectives are integrated into our forward budgets and operational planning, and
we are committed to delivering on the aggressive targets set before us,
including the expansion of our residential broadband subscriber base in Moscow
to over 1 million customers by the end of 2008 and the doubling of our regional
broadband subscriber base."

Irina Matveeva, Chief Financial Officer, added: "We made significant steps
during 2007 to simplify the legal and organizational structure of the Group, in
order to streamline our business processes and the efficiency of the overall
business. This work is continuing in 2008. Despite this ongoing restructuring
process and the changing regulatory environment, we have continued to
demonstrate sustainable growth and healthy profitability levels.

"Looking forward, we expect Group revenues to grow organically by 15 to 20% in
2008 when excluding the Federal Budget compensation received in 2007. We also
expect to deliver a full year 2008 OIBDA margin of between 38 and 40 per cent,
despite the fact that we will not receive any Budget compensation in 2008 and
excluding the impact of the new long term incentive plan introduced from April
2008, further acquisitions and any unforeseen regulatory changes. The margin
guidance does however include the ongoing investments and start-up projects in
the regions, which are expected to be principal drivers of revenue growth and
profitability from 2009.

"We launched a number of strategic projects during 2007, including the selective
modernization of the 'last mile' in Moscow, green-field start-ups in the Moscow
suburbs, and the new WiMAX network development in Moscow. We therefore expect
2008 cash capital expenditure to continue to represent approximately 25% of
revenues, again when excluding the non-recurring Federal Budget contribution
received in 2007."

FINANCIAL SUMMARY

-0-
*T
(US$ Q4 2007 Q4 2006 Growth Q3 2007 Growth FY 2007 FY 2006 Growth
mill-
ions)
(%) (%) (%)
Revenues 482.1 292.1 65 372.2 30 1,562.4 1,120.2 39

Stock
bonus
award - 62.1 - - - - 62.1 -

OIBDA 200.0 35.3 467 159.7 25 663.2 366.5 81
Margin
(%) 41.5 12.1 - 42.9 - 42.5 32.7 -

Operating
Income 139.2 (4.5) - 117.7 18 485.3 235.5 106
Margin
(%) 28.9 - - 31.6 - 31.1 21.0 -

Change in
fair
value of
call and
put
option
less
minority
share (37.0) 33.4 - 103.8 - 81.3 33.4 -

Impair-
ment of
long-
term
invest-
ments 22.7 - - - - 22.7 - -

Net
income 51.8 (63.1) - (68.8) - 43.8 82.5 (47)

Cash Flow
from
Opera-
tions 153.4 44.7 243 133.5 15 488.4 288.7 69
Cash
CAPEX 135.8 100.3 35 66.8 103 345.4 306.5 13
Total
Assets 4,630.3 3,537.6 31 3,963.7 17 4,630.3 3,537.6 31
*T

OPERATING REVIEW

Group Overview

Comstar reported 65% year on year revenue growth in the fourth quarter following
continued high consumer demand for the MGTS unlimited tariff plan for regulated
residential voice services introduced in February 2007, as well as the ongoing
revenue boost from fixed-to-mobile calls and the appreciation of the Russian
Ruble against the US dollar. The growth also included the consolidation of the
full year 2007 results of Digital Telephone Networks South (DTN) and Regional
Technical Centre (RTC) in the fourth quarter results, following the completion
of the two acquisitions during the fourth quarter. The two operations reported
combined full year 2007 revenues of US$ 80.6 million, up 49.8% year on year.
Fourth quarter Group revenues were up 41.5% year on year on a pro-forma(2)
basis.

Group revenues were up 30% in the fourth quarter when compared to the third
quarter of 2007, despite the fact that the third quarter revenues included US$
9.6 million of compensation from the Federal Budget for previously provided
customer discounts(3). No further compensation is anticipated moving forward.
Fourth quarter Group revenues were up 8% quarter on quarter on a pro-forma(2)
basis.

Comstar generated 39% year on year revenue growth for the twelve months ended
December 31, 2007, again reflecting the high demand for the unlimited tariff
plan, as well as the US$ 36.6 million of compensation from the Federal Budget
(compared to US$ 25.8 million in 2006), increased revenues of US$ 118.8 million
from fixed-to-mobile calls (compared to US$ 36.3 million in 2006), higher
regional revenues of US$ 127.7 million or 8% of Group revenues in 2007 (compared
to US$ 39.2 million or 3% of Group revenues in 2006), and the ongoing
appreciation of the Russian Ruble against the US dollar(4).

-0-
*T
Operating Expenses Q4 Q4 Growth Q3 Growth FY FY Growth
2007 2006 2007 2007 2006
(US$ millions)
Employee costs 110.1 84.7 30% 89.5 23% 364.1 281.4 29%
Network traffic
costs 60.6 34.6 75% 44.2 37% 175.6 104.2 68%
Selling & marketing 22.2 11.4 94% 11.1 100% 48.7 35.7 36%
Repairs &
maintenance 21.7 11.4 91% 18.1 20% 70.8 72.3 -2%
Taxes 11.9 10.6 12% 9.8 21% 43.2 37.8 14%
Utility & energy
costs 12.7 7.6 68% 7.1 79% 38.7 26.6 46%
Other, net 43.1 34.5 25% 32.8 31% 158.0 133.6 18%
----- ----- ------ ----- ------ ----- ----- ------
Total Operating
Expenses(5) 282.1 194.7 45% 212.5 33% 899.1 691.6 30%
----- ----- ------ ----- ------ ----- ----- ------
% of revenues 59% 67% - 57% - 58% 62% -
*T

Group operating expenses increased by 45% year on year in the fourth quarter,
and were up 33% quarter on quarter. This increase primarily reflected the
scaling of the Group's operations, the inclusion of the full year of expenses
for the acquired DTN and RTC businesses, the growing level of Calling Party Pays
(CPP) traffic, and the increased level of sales and marketing expenses in line
with the accelerated growth of the Moscow broadband subscriber base. However,
operating expenses as a percentage of sales declined from 67% to 59% year on
year but increased from 57% in the third quarter.

Group OIBDA, excluding the US$ 62.1 million of non-comparable stock bonus awards
in the fourth quarter of 2006, consequently more than doubled year on year, and
increased by 25% quarter on quarter, to US$ 200.0 million. The OIBDA margin
increased from 33.3% to 41.5% year on year, and was down from 42.9% in the third
quarter. The year on year increase reflected the margin benefit of the
introduction by MGTS of the unlimited tariff plan, the contribution of the high
margin businesses acquired in the fourth quarter of 2007. The quarter on quarter
decline reflected the Federal Budget compensation received in the third quarter.

Group OIBDA for the year, when excluding the non-recurring stock bonus awards in
the fourth quarter of 2006, increased by 55% year on year. The full year OIBDA
margin increased from 38.3% to 42.5%. When excluding the US$ 36.6 million and
US$ 25.8 million of compensation from the Federal Budget received in 2007 and
2006, respectively, and the stock bonus awards in 2006, the OIBDA margin
amounted to 41.1% in 2007, compared to 36.8% in 2006.

The Group's depreciation and amortisation charges increased from US$ 39.7
million in the fourth quarter of 2006 and US$ 41.9 million in the third quarter
of 2007 to US$ 60.8 million in the fourth quarter and reflected the acquisitions
and capital expenditure made during 2007. Underlying Group operating income,
excluding the stock bonus awards, increased by 2.4 times year on year in the
fourth quarter and by 18% quarter on quarter to US$ 139.2 million, with an
operating margin of 28.9%.

Fourth quarter net interest expenses increased from US$ 0.6 million to US$ 8.9
million year on year, and reflected the lower amount of cash and cash
equivalents during the period, as well as the increased gearing in the Group's
balance sheet.

The Group's fourth quarter 2006 results below the 'Operating Income' line also
included a US$ 60.0 million non-cash charge arising from the revaluation of the
call and put option issued in part payment for the acquisition of a 25% plus one
share stake in regional telecommunications holding company Svyazinvest in
December 2006. The call element of the option was exercised in December 2007,
with the substantially less volatile put element remaining in place for up to
twenty four months. The revaluation of the instrument gave rise to a US$ 66.4
million non-cash gain in the fourth quarter of 2007. The 44% minority interest
in the revaluation of the call and put option reduced the total net impact of
the instrument on the Group's net income by US$ 26.6 million to US$ 33.4 million
loss in the fourth quarter of 2006 and by US$ 29.4 million to a US$ 37.0 million
gain in the fourth quarter of 2007. The call and put option adversely affected
the 2007 full year results by US$ 145.9 million before a US$ 64.6 million
positive impact at the minority interest level.

In the fourth quarter Comstar also made a provision for long term investments
for the total amount of US$ 22.7 million.

Group pre-tax profit for the fourth quarter, when excluding the stock bonus
awards in 2006, the impact of the revaluation of the call and put option in both
periods and impairment of long-term investments in 2007(6), increased by 109%
year on year to US$ 129.6 million in the fourth quarter, and by 27% from the
third quarter. The effective tax rate, when excluding the aforementioned items,
was 19.7% in the fourth quarter of 2007 and 26.5% for the full year 2007,
compared to 23.5% and 21.4% for the respective periods of the previous year. The
lower effective rate in 2006 was primarily due to the non-taxable foreign
exchange gains on the IPO proceeds, which were held as cash and short-term
investments for a period of time. Such cash and investments were held in the
Group's functional currencies in 2007 so did not create such a beneficial
effect. However, the 2007 effective rate was positively affected by the US$ 19.9
million decrease in MGTS' deferred tax liability following the deduction of
depreciation charges for certain property, plant and equipment items.

The Group reported a net profit of US$ 51.8 million in the fourth quarter,
compared to a net loss of US$ 63.1 million for the same period of 2006. Group
net income for the year amounted to US$ 43.8 million compared to US$ 82.5
million in 2006.

Broadband Business in Moscow & the Regions

The Broadband business comprises the Group's broadband operations in Moscow and
the Russian Regions. Moscow's broadband business was previously primarily
reported within the Comstar--Direct business area. The presentation below
therefore provides an aggregated breakdown of the broadband business across the
Group, but the operating and financial results are included in each of the three
business units, in line with the provision of services by each business unit.

-0-
*T
Q4 Q4 Growth Q3 Growth
2007 2006 2007
Moscow
Residential subscribers
Number of subscribers (000s) 651 360 81% 453 44%
Revenues (US$ millions) 28.9 20.2 43% 24.2 20%
Average monthly revenue per line (US$) 17.5 19.5 (10%) 17.9 (2%)
Corporate subscribers
Number of subscribers (000s) 44 14 214% 14 214%
Revenues (US$ millions) 24.3 8.2 198% 10.9 123%
Average monthly revenue per line (US$) 276.0 200.7 38% 230.4 20%
Regions
Residential subscribers
Number of subscribers (000s) 33 1 - 4 -
Revenues (US$ millions) 7.7 0.4 - 0.2 -
Average monthly revenue per line (US$) 19.0 - 18.6
Corporate subscribers
Number of subscribers (000s) 15 1 - 3 -
Revenues (US$ millions) 9.2 1.3 - 1.6 -
Average monthly revenue per line (US$) 82.5 - 163.4

Total number of broadband subscribers
(000s) 743 376 98% 475 57%
Total revenues from broadband services 70,2 30.0 134% 36.8 91%
*T

Broadband is the primary driver of the fixed-line telecommunications business in
Russia over the next five years. This reflects the rapidly evolving market
environment in both Moscow and the Russian regions. Comstar is therefore
investing in technology and marketing, in order to ensure market leadership
across Russia through 2011 and beyond. Broadband is rapidly replacing Dial-up in
Moscow as a mass market product. Broadband penetration in Moscow is forecast to
reach 83% by 2011, compared to an estimated level of 49% at the end of 2007(7),
with broadband infrastructure already covering large parts of the city and now
developing in the suburbs. The next few years therefore offer a critical window
for signing up residential users to a service that is affordable, easy to use,
reliable and simple to upgrade to.

Comstar is using the MGTS sales and technical support teams and dealer network
to market broadband services to MGTS's 3.6 million subscriber households, as
well as introducing post-paid tariffs and single billing for all services, and
selectively modernizing MGTS's unique 'last mile' access in Moscow.

Comstar's Moscow broadband subscriber base grew by 81% in 2007 to 695,000
customers, including 651,000 residential subscribers. This growth was driven
primarily by the launch of MGTS's "Broadband in every Home" campaign in November
and the active engagement of retail chains at the point of sale. The new
broadband strategy provides a significant competitive advantage and a platform
for delivering a range of value-added services. The number of pay-television
subscribers in Moscow increased by 47% year on year to 122,300 homes.

A Group record of 198,000 residential broadband subscribers were added in the
fourth quarter alone, representing 68% of the 291,000 additions for the whole
year. 97% of the new subscribers in the fourth quarter chose tariff plans with
speeds of not less than 1 megabit per second. Comstar's share of the Moscow
broadband market consequently increased to 34% at the end of 2007, compared to
32% at the end of 2006. Comstar's objective is to have a market share of
approximately 50% by the end of 2011.

Despite the substantial acceleration in the subscriber intake at the end of the
year, monthly broadband residential ARPU in Moscow was US$ 17.5 in the fourth
quarter and US$ 17.1 for the full year, compared to US$ 17.9 in the third
quarter.

The number of broadband access points used by corporate subscribers in Moscow
also more than doubled to 44,000 during 2007, and partly reflected the change in
the way that corporate users are serviced with effect from the beginning of the
fourth quarter.

The selective modernization of the "last mile", using "fiber to the curb" and
ADSL 2+ technologies, provides existing subscribers with more bandwidth and the
capacity to deliver high-speed Internet at 24 megabits per second, as well as to
offer new value-added services such as High Definition Television. HDTV tests
were launched in parts of Moscow after the end of the year in February 2008,
with the full commercial launch of such new services on the modernized network
anticipated in the summer of 2008. Comstar's committed deployment of a mobile
WiMAX network in Moscow in late 2008, in cooperation with Intel, will provide
even greater flexibility for users.

Comstar will therefore be able to offer an unrivalled 'quintuple' play service
offering - local and long distance telephony, unlimited wire-line broadband
Internet and HDTV - all in the home - and WiMAX mobile Internet access from a
laptop when on the move. Furthermore, subscribers will be charged for the
services on a single bill.

Comstar's regional broadband subscriber base outside Moscow grew to over 43,400
users by the end of the year, up twenty times year on year. The number of
regional residential broadband subscribers increased from 800 at the beginning
of the year to 32,900 by the end of 2007.

DTN, which was acquired during the fourth quarter, is the largest alternative
telecommunications operator in Russia, and accounts for over 30,000 of Comstar's
regional broadband subscribers. Comstar's regional and international companies
started offering broadband services on their own Next Generation Networks in the
second half of 2007, and currently provide broadband services in St. Petersburg
and the Samara, Saratov, Tyumen and Orenburg regions, as well as in the
Yamalo-Nenets and Khanti-Mansi Autonomous Areas.

SEGMENTAL OPERATING REVIEW

1. Traditional Segment in Moscow

Comstar owns 56% of Moscow City Telephone Network (MGTS), which is Moscow's
incumbent fixed-line telecommunications operator and the infrastructure provider
for the Group. MGTS is the owner of the 'last mile' access in Moscow, which is
not unbundled, and has over 4.4 million residential and corporate active lines.
MGTS is the Group's provider of regulated voice services and unregulated mass
market broadband connection services for residential subscribers in Moscow.

Operating Highlights

-0-
*T
Q4 2007 Q4 Growth Q3 Growth
2006 2007
--------------------------- ---------------- ----- ------ ----- ------
Installed telephone lines
(000s) 4,795(8) 4,796 0% 4,842 (1%)

Residential
Number of subscribers /
active lines (000s) 3,586 3,572 0% 3,582 0%
Average monthly revenue
per line (US$) 12.2 7.8 56% 11.5 7%

CPP traffic (millions of
minutes) 386 272 42% 339 14%
--------------------------- ---------------- ----- ------ ----- ------

Corporates
Number of active lines
(000s) 767 763 1% 764 0%
Number of subscribers
(000s) 67 73 (7%) 74 (9%)
Average monthly revenue
per subscriber (excl.
revenue from points of
interconnect) (US$) 236.8 192.4 23% 207.5 14%

Number of interconnect
points (000s) 28 29 (2%) 28 2%
Average monthly revenue
per interconnect point
(US$) 198.4 187.6 6% 207.2 (4%)

CPP traffic (millions of
minutes) 167 98 70% 147 14%
--------------------------- ---------------- ----- ------ ----- ------

Operators
Number of interconnected
operators 227 254 (11%) 229 (1%)

Number of interconnect
points (000s) 227 188 21% 210 8%
Average monthly revenue
per interconnect point
(US$) 63.8 57.5 11% 45.2 41%

DLD/ILD traffic (millions
of minutes) 362 553 (35%) 325 12%
DLD/ILD traffic charges
per minute (US$) 0.030 0.016 87% 0.029 3%
*T

MGTS had a total installed capacity of 4.8 million telephone lines in Moscow by
the end of 2007, including 4.4 million active residential and corporate lines.
MGTS therefore accounted for 97% of the active residential lines in the City,
and 21% of the overall Moscow fixed-line telecommunications market in terms of
revenues generated in 2007.

MGTS has increased the level of its network digitalization from 13% to 54% over
the past five years, and 63% of the network is planned to have been digitalized
by the end of 2008. MGTS is also simultaneously and selectively modernizing its
'last-mile' infrastructure, using Fiber-to-the-curb (FTTC) and ADSL2+
technology, in order to exploit technical and marketing synergies by delivering
broadband Internet access at higher speeds and providing additional value-added
services such as High Definition Television.

MGTS replaced a total of 47 analogue automated telephone stations in 2007 with
the resulting introduction of 660,500 new numbers. MGTS plans to install a
further 450,000 numbers in 2008. In addition, MGTS also expanded the capacity of
its data-exchange network by equipping its automated telephone stations with
additional Digital Subscriber Line Access Multiplexers (DSLAMs), in order to
accelerate the growth in the broadband subscriber base. As a result, the
monitored capacity of the data exchange network reached 822,000 ADSL ports by
the end of 2007.

MGTS continued to act as an agent to licensed long-distance operators Rostelecom
and MTT during 2007, in order to provide DLD/ILD services to its subscribers.
The volume of DLD/ILD traffic decreased year on year due to the regulatory
change in the contractual relationships with licensed long distance carriers.

Comstar is also implementing a major restructuring programme at MGTS, in order
to enhance business efficiency levels and streamline operating processes. The
number of management layers has been reduced, with corporate functions moved to
Comstar and non-core services outsourced. In turn, a number of technical
personnel have been moved from Comstar to MGTS. The MGTS headcount is being
steadily reduced from the more than 15,600 employees at the beginning of 2007 to
13,400 at the year end. The tactical goal is to increase the number of lines per
employee from 290 in 2007 up to 900 by the end of the digitalization process.

Financial Highlights

-0-
*T
(US$ Fourth Quarter Third Quarter Full Year
millions)
2007 2006 Growth 2007 Growth 2007 2006 Growth
Revenues
Residen-
tial 134.1 86.1 56% 135.1 (1%) 531.8 334.6 59%
Corporate 72.0 62.4 15% 66.4 8% 266.8 229.5 16%
Operators 89.1 59.9 49% 77.0 16% 313.9 238.1 32%
------ ------ ------ ------ ------ ------- ------- ------
Total 295.2 208.4 42% 278.5 6% 1,112.5 802.2 39%

Intersegment
sales (33.9) (29.8) 14% (31.1) 9% (127.0) (107.3) 18%
------ ------ ------ ------ ------ ------- ------- ------
Net Revenues 261.3 178.6 46% 247.4 6% 985.4 694.9 42%
Operating
Expenses
(excluding
deprec-
iation and
amortiz-
ation) 149.3 124.3 20% 138.6 8% 561.6 446.2 26%
OIBDA 145.9 84.1 74% 139.9 4% 551.3 356.0 55%
Margin (%) 49% 40% - 50% - 50% 44% -
*T

MGTS generated 42% year on year revenue growth in the fourth quarter, which
largely reflected the regulated residential voice tariff increases introduced by
the Federal Tariff Service in February 2007, as well as higher revenues from
operators due to the increase in the fees paid by other operators to use the
MGTS network.

51% of MGTS residential subscribers were on the 'unlimited' tariff plan for
regulated voice services by the end of 2007, with 28% on the 'per minute' plan,
and the remaining 22% electing the 'combined' plan. The time limit on the
combined plan was increased to 450 minutes at the beginning of December, whilst
the price for the unlimited monthly tariff plan was reduced by 10% from 380
Rubles to 345 Rubles(9) with effect from February 2008, following changes made
by the Regulator in December 2007.

The introduction of CPP from July 2006 also continued to positively impact
residential subscriber revenues by contributing US$ 19.9 million of revenue in
the fourth quarter, compared to US$ 12.9 million for the same period of 2006.
Residential CPP traffic levels increased by 14% quarter on quarter from 339
million minutes to 386 million minutes.

Corporate voice revenues were up 15% year on year in the quarter, with corporate
CPP traffic increasing by 14% quarter on quarter from 147 million minutes to 167
million minutes and contributing US$ 10.2 million of revenue in the quarter,
compared to US$ 5.4 million for the same period of 2006.

Revenue from Operators was up 49% year on year in the quarter, which reflected
the 55% increase in access node and trunk rental revenues. Long-distance
revenues increased by 26% year on year in the quarter as a result of the rise in
per minute charges from February 1, 2007 and the introduction of the
compensation surcharge.

MGTS therefore reported a 74% year on year increase in fourth quarter OIBDA, and
an increased OIBDA margin of 49.4%, which compared to 40.3% in the fourth
quarter of 2006 and 50.2% in the third quarter of 2007. The quarter on quarter
decline in the OIBDA margin is due to the compensation received from the Federal
Budget in the third quarter. When excluding this non-comparable item from the
third quarter results, the OIBDA margin increased from 48.5% in the third
quarter.

2. Alternative Segment in Moscow (Comstar & Comstar--Direct)

Comstar owns a group of leading alternative fixed-line telecommunications
operators in Moscow, which provide broadband internet and multi-service
solutions to residential and corporate subscribers in Moscow and the Moscow
region. This segment includes the Comstar-Direct and Comstar-Moscow operations,
which were previously reported as separate business segments, but have been
merged with effect from the fourth quarter of 2007 in line with the Group's
operational reorganization.

Operating Highlights

-0-
*T
Q4 Q4 Q3
2007 2006 Growth 2007 Growth
Installed capacity / telephone lines
(000s) 655 643 2% 644 2%

Residential subscribers
Number of subscribers (000s) 660 483 37% 540 22%
Broadband Internet subscribers
(000s) 595 360 66% 469 28%
-of which, IPTV 122 83 47% 109 12%
Average monthly revenue per
Broadband subscriber (US$) 18.3 20.0 (8%) 18.2 (1%)

Dial-Up Internet subscribers (000s) 55 113 (51%) 63 (14%)
Average monthly revenue per Dial-Up
subscriber (US$) 5.8 5.6 3% 4.7 23%

Corporate subscribers
Number of subscribers (000s) 35 35 1% 36 (1%)
Average monthly revenue per
subscriber (US$) 504.5 344.6 46% 434.2 16%

Operators
Number of active lines (000s) 442 442 0% 442 0%
-of which, used by mobile
operators (000s) 326 326 0% 326 0%
*T

The number of residential subscribers increased by 37% year on year to 660,000
at the end of 2007 following the rapid growth in the residential broadband
subscriber base.

The corporate subscriber base was stable year on year at 35,000, despite the
competitive disadvantage under which Comstar operated by providing long-distance
services as an agent to licensed DLD/ILD operators, and therefore having to
change the contracts with all of its corporate subscribers.

The major achievement in this respect occurred after the end of the reporting
period in February 2008 when Comstar completed the construction of its own
domestic and international long-distance network. The US$ 14 million investment
to build out the network will enable Comstar to strengthen its corporate client
service offering by providing its own long-distance services.

A fixed exchange rate of 28.7 Russian Rubles per US dollar was established
during the year, in order to offset the fact that a large proportion of services
provided to corporate and high-income clients are priced in US dollars following
earlier periods of high inflation in Russia.

Comstar is also developing its alternative fixed-line business in the priority
region around Moscow City. The Moscow Region is the fastest growing regional
telecommunications market in Russia and there is a clear overlap in the existing
and potential customer base. The region has a population of 6.6 million people
and 2.5 million residential households. Fixed line telephony penetration is
growing fast but remains low at 26%, with broadband penetration at only 6%.

New property development and rising personal income levels are the key drivers
of growth, and provide the impetus for the rapid emergence of 'Triple-Play'
residential service offerings. Comstar had a 2.7% share of the estimated US$ 378
million combined traditional and alternative fixed-line telecommunications
market (in terms of revenues) in the Moscow suburbs by the end of 2007. Comstar
intends to significantly grow this market share.

Comstar had already established points of presence in 26 out of the 36 regional
districts by the end of 2007, and had also implemented a major marketing program
to increase the number of subscribers using wireless broadband technology as an
interim solution whilst the network is built. Comstar expects to be present in
all districts by the end of 2008.

Comstar is also in the process of merging all of its Moscow and Moscow Region
operating companies into a single entity. Contrast-Telecom, Telmos and
MTU-Inform were integrated during 2007, and Golden Line and Port Telecom will be
integrated in the first half of 2008.

Financial Highlights

-0-
*T
(US$ millions) Fourth Quarter Third Full Year
Quarter
2007 2006 Growth 2007 Growth 2007 2006 Growth
Revenues
Corporate 55.1 38.7 42% 47.2 17% 189.9 169.2 12%
Operators 42.0 32.9 28% 38.1 10% 142.2 119.1 19%
Residential 33.5 25.9 30% 27.8 21% 120.3 100.3 20%
----- ----- ------ ----- ------ ----- ----- ------
Total 130.7 97.5 34% 113.1 16% 452.5 388.6 16%

Intersegment sales (2.6) (0.5) - (0.2) - (3.3) (2.5) 32%
----- ----- ------ ----- ------ ----- ----- ------
Net Revenues 128.1 96.9 32% 112.9 13% 449.2 386.1 16%
Operating Expenses
(excluding
depreciation and
amortization and
stock bonus) 113.9 82.3 38% 93.0 22% 376.4 316.4 19%
OIBDA 16.8 15.2 11% 20.1 (16%) 76.1 72.2 5%
Margin (%) 13% 16% - 18% - 17% 19% -
*T

The combined value of the fixed-line telecommunications market in Moscow,
including both traditional and alternative services, was estimated at US$
5.2(10) billion in 2007. Comstar's 2007 revenues represented an 8% share of this
market, or 29% when including MGTS, which makes the Group the clear market
leader.

Comstar's Alternative Segment revenues in Moscow increased by 34% year on year
in the fourth quarter, due primarily to the rapid increase in the broadband
residential subscriber base, growing CPP traffic and the appreciation of the
Russian Ruble against the US dollar.

CPP revenues from calls to mobile users contributed US$ 4.8 million of corporate
and residential voice revenue in the quarter, compared to approximately US$ 4.2
million in the third quarter of 2007 and US$ 1.8 million in the fourth quarter
of 2006.

Segment OIBDA increased by 11% year on year following the changes in the
management and organizational structure. The OIBDA margin decreased to 13% from
16% in the fourth quarter of 2006, primarily as a result of the reclassification
of the existing stock option plan from equity to liability, which resulted in an
approximately US$ 6.2 million catch-up adjustment to fair value of the
non-vested options accrued to date, which was recorded in the fourth quarter of
2007.

3. Alternative segment in the regions & CIS (Comstar)

Comstar's regional and international business comprises the Group's operations
in the Russian regions (5 federal regions: Central, North-West, South, Volga and
Ural), and in Ukraine and Armenia.

Comstar completed the acquisition of 100% of DTN, the largest alternative fixed
line telecommunications company in Russia and operating in the Southern Federal
District, for a total cash consideration of RUB 4.1 billion (approximately US$
167.4 million) in November 2007. Comstar also completed the acquisition of 87.5%
of RTC, an alternative fixed line telecommunications operator in the
Khanty-Mansi region, for a total cash consideration of US$ 21.0 million in
December 2007. Both businesses significantly enhance Comstar's presence in key
regions of Russia, which are showing strong growth and increasing penetration
levels.

Operating Highlights

-0-
*T
Q4 Q4 Q3
2007 2006 Growth 2007 Growth
Residential subscribers
Number of subscribers (000s) 423 75 466% 83 408%
Average monthly revenue per user
(US$) 7.8 11.0 (29)% 9.6 (19)%
Corporate subscribers
Number of subscribers (000s) 42 6 604% 11 269%
Average monthly revenue per user
(US$) 112.2 381.5 (71)% 165.5 (32)%
Operators
Number of active lines (000s) 9.2 8.1 13% 9.3 (1%)
*T

Comstar is developing its alternative business in Russia's regional markets and
the CIS as an integral part of the overall corporate development strategy.
Internet and broadband penetration levels outside Moscow are low but increasing
rapidly, underlining the long-term attraction of the regional markets. The share
of dial-up access is simultaneously expected to fall from 28% at the end of 2007
to 15% by the end of 2010.

Comstar's broadband strategy also extends to the Russian regions, where Comstar
had 43,400 broadband users at the end of 2007. The Pay-TV subscriber base
reached 102,200 subscribers at the end of the year following the acquisition of
DTN. Comstar has 68,800 dial-up subscribers outside Moscow.

A new branch was opened in St. Petersburg in August, in order to boost the
market share of Comstar's existing Astelit subsidiary, whilst Comstar also
acquired 100% of the shares of alternative operator Sochitelecomservice, located
in 2014 Olympics host city Sochi in the Krasnodar Region, for US$ 0.75 million
in August. Sochitelecomservice and DTN will subsequently be integrated into
Comstar's Southern regional Branch. Alongside the organic development of the
existing regional operations, Comstar is also expanding into target markets
through the acquisition of market-leading Competitive Local Exchange Carriers,
with a particular focus on the Southern, Volga and Ural Federal Districts. The
acquisitions of DTN and RTC in the fourth quarter demonstrate this commitment,
and significantly add to Comstar's regional footprint.

Comstar also expanded its license coverage in 2007 by obtaining licenses for IP
Voice Data transmission, including WiMAX services, in the twenty largest regions
in Russia in January 2007.

Comstar continued to invest in regional network infrastructure during 2007.
Comstar's Saratov branch launched an NGN network in September, with 22 access
points covering the whole of the city, as well as a telematics access network
based on ADSL2+ technology with 37 access points and 5,000 ports.

Comstar's Tyumenneftegazsvyaz (TNGS) subsidiary, which is the leading CLEC in
the Tyumen Region, announced the completion of the first phase build-out of its
microwave backbone infrastructure in the Khanty-Mansi Autonomous Region, and the
neighbouring Yamalo-Nenets Autonomous Region, after the end of the period in
January 2008. Comstar plans to increase the number of broadband access points by
10,000 ports in 2008.

Comstar is in the process of integrating its separate operating entities into a
single subsidiary in Ukraine. Comstar also launched IPTV services in Odessa
after the end of the period in March 2008.

Comstar announced after the end of the period in January 2008 that it had begun
building a wireless broadband network in Armenia, which is expected to be
completed in late 2008. Comstar initially plans to build 24 base stations and
use leased fiber-optic lines, as well as radio relay channels and bridges. The
WiMAX network will be used as a base to provide voice services, high-speed
internet access, and multi-media content delivery to residential and corporate
subscribers.

Financial Highlights

-0-
*T
Fourth Quarter Third Full Year
Quarter
(US$ millions) 2007 2006 Growth 2007 Growth 2007 2006 Growth
Revenues
Residential 31.5 2.5 1178% 2.4 1223% 38.9 9.7 301%
Corporate 37.6 6.6 472% 5.4 593% 52.9 19.9 166%
Operators 22.9 7.4 209% 4.0 474% 35.1 9.3 276%
Other 0.8 0.1 612% - - 0.9 0.3 208%
----- ------ ------ ----- ------ ----- ----- ------
Total 92.7 16.6 460% 11.8 684% 127.7 39.2 226%

Operating Expenses
(excluding
depreciation and
amortization) 55.9 16.9 230% 10.6 427% 87.5 35.2 149%
OIBDA 36.8 (0.4) - 1.2 - 40.2 4.0 -
Margin (%) 39.7% (2.3%) - 10.3% - 31.5% 10.3% -
*T

Revenues increased by almost 6 times year on year in the fourth quarter,
primarily as a result of the two largest acquisitions of controlling stakes in
Comstar's history, with the subsequent recognition of the full year results of
the two operations in the fourth quarter. Both acquired companies have higher
OIBDA margins than Comstar's existing operations outside Moscow, the majority of
which are in the early stages of development. DTN increased its revenues by 60%
year on year to US$ 60.3 million and reported on OIBDA margin of 51.5% in 2007.
RTC had revenues of US$ 20.3 million, up 26% year on year, with an OIBDA margin
of 22.4% in 2007. As a result of the consolidation of these assets and ongoing
restructuring and conversion of subsidiaries into branches Comstar's OIBDA
margin outside Moscow significantly improved year on year to 31.5%, and the
combined operations were profitable for the year.

FINANCIAL REVIEW

Group net cash provided by operations increased by 46% year on year to US$ 153.4
million in the fourth quarter, when excluding the stock bonus awards in the
fourth quarter of 2006, and was up from US$ 133.5 million in the third quarter.

Net cash used in investing activities increased to US$ 714.4 million in the
fourth quarter in line with higher capital expenditure levels, as well as the
acquisition of the DTN and RTC businesses and the US$ 424.9 million purchase of
short term investments. Group capital expenditure increased by 35% year on year
and by 103% quarter on quarter to US$ 135.8 million, and primarily comprised the
ongoing digitalization process, the development of Next Generation Network
infrastructure at MGTS, the modernization of the "last mile", and the
development of DLD/ILD network. Total capital expenditure for the twelve month
period amounted to US$ 345.4 million, despite the development of Comstar's own
long-distance network and the modernization of the "last mile" access in Moscow.

Net cash from financing activities totaled US$ 471.7 million in the quarter, and
primarily comprised the US$ 322.2 million in proceeds from the exercise of the
call option in December 2007, and the US$ 158.4 million of monies drawn down
from the existing credit facility provided by Sberbank.

The Group's cash and cash equivalents increased in the quarter to US$ 179.8
million, whilst total Group borrowings, including capital lease obligations,
increased to US$ 1,011.3 million. The Group's net debt position therefore
increased to US$ 831.5 million, but the Group's total debt to twelve month
trailing OIBDA ratio(11) continued to decline to 1.4 times, compared to 1.7
times as at September 30, 2007.

Comstar accounts for its 25% plus one share holding in Svyazinvest at cost on
the Group's balance sheet. The investment has already proved highly successful,
with the value of the stake, based on the combined market value of the listed
Svyazinvest subsidiaries, having risen by 51% from US$ 1.6 billion at the date
of purchase on December 11, 2006 to US$ 2.4 billion at the end of 2007.

SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD

On January 24, 2008 Comstar announced that it signed an agreement with Cisco for
the delivery of equipment to build NGN multi-service network in Ukraine. Kvazar
Mikro, a subsidiary of SITRONICS, will act as a subcontractor for the
installation and launch of the network.

On January 29, 2008 Comstar and SKYLINK, mobile broadband Internet and voice
services provider in 31 constituent entities of the Russian Federation, signed
agreements to join efforts for services and products implementation in Moscow.
Under the agreements, at the first phase of cooperation the companies will
promote each other's services: Moscow sales offices of both companies will offer
both SKYLINK and Stream full package products. The second phase implies
introduction of converged services, developing of more flexible charging and
reward programs for subscribers of Comstar and SKYLINK.

On January 30, 2008 Comstar announced that Tyumenneftegazsvyaz JSC (TNGS), the
leading competitive operator in the Tyumen Region, a member of COMSTAR-UTS
Group, completed the first phase of the microwave backbone (MB) construction in
the Khanty-Mansiysk Autonomous Okrug (KMAO). The backbone is expected to go
across the KMAO and the Yamalo-Nenets Autonomous Okrug (YNAO).

On January 31, 2008 Comstar announced that it started building a wireless
broadband network based on the 802.16e standard WiMAX technology in the Republic
of Armenia. The project is expected to be completed in the second part of 2008.

On February 14, 2008 Comstar announced that Comstar-Direct has soft-launched the
TV-on-Demand service.

On February 27, 2008 - Comstar announced that Comstar-Direct soft-launched the
High-Definition Television ("HDTV") service.

On February 28, 2008 Comstar announced that it completed building its inter-city
and international network. The total volume of capital investments in the
project amounted to approximately US$ 14 million. Comstar applied to the
Ministry for Information Technologies and Communications of the Russian
Federation to receive access codes for providing long distance services.

On February 29, 2008 Comstar announced that its Board of Directors adopted the
Comstar Group strategy on technology, finance and marketing.

On March 3, 2008 Comstar announced that COMSTAR-Ukraine is the first to have
launched an interactive digital TV (IP-TV) service in Odessa.

On March 28, 2008 Comstar announced that it completed the design phase of its
launch of a telecommunications and multimedia FTTB network in 2014 Olympic host
city Sochi in the south of Russia.

On March 31, 2008 Comstar announced that its Board of Directors 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.

Comstar was a communication service provider for the summit between the
Presidents of Russia and the USA in Sochi on April 6, 2008.

Following the Extraordinary General Meeting of its Shareholders on April 14,
2008, the new Board of Directors of the Company was elected. The shareholders
approved the new Board of Directors as follows: Anatoly Akimenko, Vice President
of Access Industries, Anna Goldin, Vice President for Legal Issues and Head of
Legal Group of Sistema, Sergey Drozdov, Senior Vice President, Head of Property
Group of Sistema, Dietmar Kuhnt, Member of Supervisory Boards of
Allianz-Versicherungs-AG, BDO Deutsche Warentreuhand AG, Dresdner Bank AG, GEA
Group AG, Hapag Lloyd AG, Hochtief AG and TUI AG; Independent Director of
Comstar UTS, Andrey Matyukhov, Director of Portfolio Strategy Department of
Strategy and Development Division of Sistema, Sergey Pridantsev, President and
CEO of Comstar UTS, Yngve Redling, Chairman of the Swedish-Russian bilateral
working group for Information Technology, Independent Director of Comstar UTS,
Vitaly Savelyev, First Vice President, Head of Telecommunications Asset
Management Division of Sistema, Dmitry Ustinov, Head of Financial Department of
Finance and Investments Division of Sistema. Mr. Savelyev was elected as
Chairman of Comstar's Board of Directors.

On April 15 2008 Comstar accomplished re-organization of ZAO Golden Line in the
form of legal merger with COMSTAR-UTS OJSC.

OTHER INFORMATION

Conference call

Comstar will host a conference call today at 8.00 am (ET) / 1.00 pm (UK time) /
2.00 pm (CET) / 4.00 pm (Moscow Time). Participants may access the call by
dialling the following numbers:

UK / International: +44 20 8609 3823

US: +1 866 388 1926

A replay facility will also be made available for 7 days after the call and may
be accessed by dialing the following numbers and using the following pin code:

UK / International: +44 20 8609 0289

US: +1 866 676 5865

PIN: 211387#

The replay facility will also be made available at
http://www.comstar-uts.com/en/for_investors/finresults/2007/ in due course.

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

-0-
*T
Comstar UTS Shared Value Limited
Masha Eliseeva Matthew Hooper
Tel: +7 985 997 08 52 Tel. +44 (0) 20 7321 5010
ir@comstar-uts.ru comstar@sharedvalue.net
*T

Comstar UTS is the leading fixed-line telecommunications company in Moscow.
Comstar provides voice, data, television and other value-added services to
residential and corporate subscribers and operators, using its extensive
backbone network and exclusive last mile access to 97% of Moscow households. The
Company also offers communications services in five Russian regions, Armenia and
Ukraine. Comstar had 695,000 broadband subscribers in Moscow. Comstar had 3.6
million residential subscribers in Moscow, including 651,000 residential
broadband internet subscribers in Moscow, 102,000 corporate subscribers in
Moscow, and approximately 448,000 regional and international subscribers
including 33,000 residential broadband internet subscribers and 102,000
residential pay-TV subscribers, at the end of 2007. Comstar generated US$
1,562.4 million of revenues and a 42.5% OIBDA margin for the twelve months ended
December 31, 2007. Comstar's Global Depositary Receipts are listed on the London
Stock Exchange (ticker: CMST).

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.

Attachment A

NON-GAAP FINANCIAL MEASURES

This results statement includes financial information prepared in accordance
with accounting principles generally accepted in the United States of America
(US GAAP), as well as other non-GAAP financial information. The non-GAAP
financial information should be considered as an addition to, but not as a
substitute for, information prepared in accordance with US GAAP.

OIBDA is operating income before depreciation and amortisation, and the OIBDA
margin is defined as OIBDA as a percentage of net revenues. These measures are
included in this results statement in order to provide additional information
regarding the Group's ability to meet future debt service payments, capital
expenditure and working capital requirements, and as a metric to evaluate
profitability. OIBDA is not a measure of financial performance under US GAAP,
and is not an alternative to operating income as a measure of operating
performance, or to cash flows from operating activities as a measure of
liquidity. While depreciation and amortisation are considered operating costs
under US GAAP, these items primarily represent the non-cash current period
allocation of costs arising from the acquisition or development of long-term
assets in prior periods. OIBDA is commonly used as a criterion for evaluation of
operating performance by credit and equity investors and analysts. The
calculation of OIBDA may be different from the calculation used by other
companies and comparability may therefore be limited. OIBDA can be reconciled to
the Group's consolidated statements as follows:

Reconciliation of OIBDA

-0-
*T
4Q 2007 4Q 2006
US$ % of US$ % of
'mln revenues 'mln revenues

Operating profit / (loss) 139.2 28.9% (4.5) (1.5)%

Add: Depreciation and amortization
OIBDA (reported) 60.8 12.6% 39.7 13.6%
OIBDA (reported) 200.0 41.5% 35.3 12.1%
Add: stock bonus OIBDA (reported) - - 62.1 21.3%

----- --------- ----- ---------
OIBDA (excluding the effect of stock
bonus) 200.0 41.5% 97.4 33.3%

3Q2007 FY 2007 FY 2006
US$ % of US$ % of US$ % of
'mln revenues 'mln revenues 'mln revenues

Operating profit /
(loss) 117.7 31.6% 485.3 31.1% 235.5 21.0%

Add: Depreciation and
amortization OIBDA
(reported) 42.0 11.3% 177.9 11.4% 130.9 11.7%
OIBDA (reported) 159.7 42.9% 663.2 42.5% 366.5 32.7%
Add: stock bonus OIBDA
(reported) - - - - 62.1 5.5%

----- --------- ----- --------- ----- ---------
OIBDA (excluding the
effect of stock
bonus) 159.7 42.9% 663.2 42.5% 428.6 38.3%
*T

ADJUSTED PRE-TAX INCOME

Pre-tax income before non-recurring stock bonus, impairment of long-term
investments and the non-cash impact of the revaluation of the call and put
option is pre-tax income adjusted for the effect of stock bonus, impairment of
long-term investments and the change in the fair value of the derivative
financial instrument (call and put option). This measure is included in the
results statement in order to provide additional information regarding the
Group's underlying performance. Stock bonus and impairment of long-term
investments have non-recurring nature. While the revaluation of derivative
financial instruments is included in the determination of pre-tax income under
US GAAP, this item only partially affects the Group's future cash flows and is
not under the control of the management, as the fair value of the call and put
option is dependant primarily on the market price of Comstar UTS GDRs.

-0-
*T
4Q 2007 4Q 2006
US$ % of US$ % of
'mln revenues 'mln revenues
Pre-tax income /
(loss)
(reported) 173.3 35.9% (60.2) (20.6%)

Add: impairment
of long-term
investments 22.7 4.7% - -
Add: stock bonus - - 62.1 21.3%
Add: change in
fair value of
financial
instrument (call
and put option) (66.4) (13.8)% 60.0 20.5%

------- ---------- ------ ---------
Pre-tax income
(adjusted) 129.6 26.9% 61.9 21.2%

3Q2007 FY 2007 FY 2006
US$ % of US$ % of US$ % of
'mln revenues 'mln revenues 'mln revenues
Pre-tax income /
(loss) (reported) (84.4) (22.7%) 277.5 17.8% 216.9 19.4%

Add: impairment of
long-term
investments - - 22.7 1.5% - -
Add: stock bonus - - - - 62.1 5.5%
Add: change in fair
value of financial
instrument (call and
put option) 186.2 50.0% 145.9 9.3% 60.0 5.4%

------ --------- ----- --------- ----- ---------
Pre-tax income
(adjusted) 101.9 27.4% 446.1 28.6% 339.0 30.3%
*T

Attachment B

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED INCOME STATEMENTS

-0-
*T
(US$ thousand, except Three months ended Years ended
for share and per December 31, December 31,
share amounts)
----------------------- -----------------------
2007 2006 (*) 2007 2006 (*)

Operating revenues $482,145 $292,054 $1,562,385 $1,120,247
Operating expenses,
excluding
depreciation and
amortisation and
stock bonus, net (282,144) (194,658) (899,145) (699,246)
Depreciation and
amortisation (60,848) (39,731) (177,907) (130,939)
Stock bonus - (62,139) - (62,139)
Other operating gains - - - 7,616

----------- ----------- ----------- -----------
Operating income /
(loss) 139,153 (4,474) 485,333 235,539

Interest income 5,769 7,790 15,680 43,537
Interest expense (14,660) (8,385) (53,613) (22,145)
Change in fair value
of derivative
financial instrument
(call and put option) 66,364 (60,000) (145,859) (60,000)
Impairment of long-
term investments (22,691) - (22,691) -
Foreign currency
transactions
(loss)/gain, net (663) 4,875 (4,528) 19,938
Gain from disposal of
an affiliate - - 3,216 -

----------- ----------- ----------- -----------
Income / (loss) before
income taxes, income
from affiliates and
minority interests 173,272 (60,194) 277,538 216,869

Income tax expense (25,537) (14,583) (118,368) (72,422)
Income from affiliates 276 1,246 2,703 3,292
Minority interests (96,183) 10,408 (118,060) (65,243)

Net income / (loss) $51,828 $(63,123) $43,813 $82,496

----------- ----------- ----------- -----------
Weighted average
number of common
shares outstanding -
basic 404,456,856 358,854,278 369,880,471 345,805,894
Earnings / (loss) per
common share - basic $0.13 $(0.18) $0.12 $0.24
Weighted average
number of common
shares outstanding -
diluted 425,236,318 358,854,278 387,235,812 346,083,856
Earnings / (loss) per
common share -
diluted $0.12 $(0.18) $0.11 $0.24
*T

(*) Amounts for the year ended December 31, 2006 were derived from the audited
consolidated financial statements of Comstar UTS as of December 31, 2006, 2005
and 2004 and for the years then ended and should be read in conjunction with
these statements. Certain prior year amounts have been reclassified to conform
to the 2007 presentation.

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED BALANCE SHEETS

-0-
*T
(US$ thousand) December December
31, 31,
2007 2006 (*)
----------- ----------
Assets

Current assets:

Cash and cash equivalents $ 179,794$ 136,621
Short-term investments 425,929 67,662
Trade receivables, net 163,028 95,868
Other receivables and prepaid expenses 101,668 87,654
Inventories and spare parts 41,328 33,740
Deferred tax assets, current portion 29,910 23,545

----------- ----------
Total current assets 941,657 445,090

Property, plant and equipment, net 1,907,112 1,477,329
Intangible assets, net 191,006 91,835
Long-term investments 1,585,109 1,508,790
Restricted cash 2,447 4,008
Deferred tax assets, long-term portion 1,631 6,725
Deferred finance charges 1,375 3,808

----------- ----------
Total assets $ 4,630,337$ 3,537,585
*T

(*) Amounts as of December 31, 2006 were derived from the audited consolidated
financial statements of Comstar UTS as of December 31, 2006, 2005 and 2004 and
for the years then ended and should be read in conjunction with these
statements.

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED BALANCE SHEETS (continued)

-0-
*T
(US$ thousand) December December
31, 31,
2007 2006 (*)
--------- ---------

Liabilities and shareholders' equity:

Current liabilities:

Accounts payable $ 55,321$ 51,023
Deferred connection fees, current portion 35,787 39,812
Subscriber prepayments 48,767 45,540
Accrued expenses and other current liabilities 99,279 49,631
Taxes payable 24,354 12,999
Debt, current portion 103,476 777,837
Capital lease obligations, current portion 10,360 14,107
Derivative financial instrument (call and put
option) 88,000 150,000

Total current liabilities 465,344 1,140,949

Long-term liabilities:

Deferred connection fees, net of current portion 117,884 109,040
Debt, net of current portion 891,321 33,529
Capital lease obligations, net of current
portion 6,150 17,467
Post-retirement obligations 35,817 10,182
Property, plant and equipment contributions 112,779 103,793
Deferred tax liabilities, long-term portion 114,123 47,619
Other long-term liabilities 31,009 8,066

Total long-term liabilities 1,309,083 329,696

Total liabilities 1,774,427 1,470,645

Minority interests 765,005 496,745

Shareholders' equity:

Share capital 23,900 23,900
Treasury stock (857) (4,004)
Additional paid-in capital 1,425,044 1,064,225
Retained earnings 472,431 433,145
Accumulated other comprehensive income 170,387 52,929

Total shareholders' equity 2,090,905 1,570,195

Total liabilities and shareholders' equity $4,630,337$3,537,585
*T

(*) Amounts as of December 31, 2006 were derived from the audited consolidated
financial statements of Comstar UTS as of December 31, 2006, 2005 and 2004 and
for the years then ended and should be read in conjunction with these
statements.

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

-0-
*T
(US$ thousand) Three months Years
ended December 31, ended December
31,
------------------ -----------------
2007 2006 (*) 2007 2006 (*)
Operating activities:
Net income / (loss) $51,828 $(63,123) $43,813 $82,496
Adjustments to reconcile net
income / (loss) to net cash
provided by operations:
Depreciation and amortisation 60,848 39,731 177,907 130,939
Stock-based compensation . 7,489 2,746 10,297 2,746
Change in fair value of
derivative financial
instrument (call and put
option) (66,364) 60,000 145,859 60,000
Effect of purchase accounting
from the beginning of the
year, net (30,884) - (30,884) -
Impairment of long-term
investments 22,691 - 22,691 -
(Gain) / loss from disposal of
fixed assets and assets held
for resale and other non-cash
items, net (2,447) 1,378 1,514 (2,812)
Gain on compensation of losses
from third parties (3,556) (4,226) (10,778) (9,217)
Gain from disposal of an
affiliate - - (3,216) -
Amortisation of deferred
finance charges 170 301 4,019 301
Deferred taxes 2,123 604 10,734 (653)
Income from affiliates - (1,246) (620) (3,292)
Foreign currency transactions
loss / (gain) on non-
operating activities, net 245 4,345 (1,093) (5,172)
Postretirement benefits (9) (2,718) 7,572 (7,125)
Minority interests 96,183 (10,408) 118,060 65,243
Provision for doubtful debts 342 3,878 5,394 11,717
Inventory obsolescence charge 1,606 - 4,932 2,735

Changes in operating assets and
liabilities:

Trade receivables 21,569 5,710 (51,541) (46,938)
Other receivables and prepaid
expenses 11,872 (4,586) 9,852 (6,276)
Inventories and spare parts (4,532) 2,209 (8,784) (6,710)
Accounts payable (9,234) 16,373 (2,766) 30,527
Deferred connection fees (2,871) (4,932) (3,964) (7,445)
Subscriber prepayments 2,565 4,010 (1,017) 2,574
Taxes payable (10) (1,378) 3,669 (6,391)
Accrued expenses and other
current liabilities (6,268) (3,950) 36,706 1,472

-------- --------- -------- --------
Net cash provided by operating
activities 153,356 44,718 488,356 288,719
*T

(*) Amounts for the year ended December 31, 2006 were derived from the audited
consolidated financial statements of Comstar UTS as of December 31, 2006, 2005
and 2004 and for the years then ended and should be read in conjunction with
these statements. Certain prior year amounts have been reclassified to conform
to the 2007 presentation.

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(continued)

-0-
*T
(US$ thousand) Three months Years
ended December 31, ended December 31,
---------------------- ----------------------
2007 2006 (*) 2007 2006 (*)
Investing activities:

Purchases of
property, plant and
equipment $(120,067) $(89,872) $(303,416) $(280,298)
Proceeds from sale of
property, plant and
equipment and assets
held for resale . 2,451 660 4,690 29,661
Purchases of
intangible assets (15,734) (10,438) (42,013) (26,160)
Acquisition of
subsidiaries, net of
cash acquired (182,412) (7,594) (183,162) (20,050)
Acquisition of
minority interests - (33,811) (1,832) (184,052)
Purchases of long-
term investments (12,314) (1,300,000) (21,382) (1,300,000)
Proceeds from sale of
long-term
investments 16,175 - 36,780 -
Purchases of short-
term investments (424,908) (87,158) (447,707) (586,614)
Proceeds from sale of
short-term
investments 23,010 455,825 96,575 602,249
(Increase) / decrease
in restricted cash (615) 59 1,561 (1,736)

---------- ----------- ---------- -----------
Net cash used in
investing activities (714,414) (1,072,329) (859,906) (1,767,000)

Financing activities:

Proceeds from
borrowings 166,988 1,340,162 849,530 1,503,995
Principal payments on
borrowings (3,984) (680,119) (712,461) (896,155)
Principal payments on
capital lease
obligations (4,851) (3,277) (17,194) (13,455)
Proceeds from
issuance of common
stock, net of
issuance costs 322,237 - 322,237 975,519
Acquisition of
treasury stock, net
of stock bonus
granted (32) (13,810) (32) (13,810)
Dividends paid (8,697) - (37,031) (1,662)
Contributions from
minority
shareholders of
subsidiaries - - - 510
Deferred finance
charges - (4,050) (1,492) (4,050)

---------- ----------- ---------- -----------
Net cash provided by
financing activities 471,661 638,906 403,557 1,550,892

Effects of foreign
currency translation
on cash and cash
equivalents 8,754 (451) 11,166 2,049

Net increase /
(decrease) in cash and
cash equivalents (80,643) (389,156) 43,173 74,660

Cash and cash
equivalents, beginning
of the period 260,437 525,777 136,621 61,961

---------- ----------- ---------- -----------
Cash and cash
equivalents, end of the
period $179,794 $136,621 $179,794 $136,621
*T

(*) Amounts for the year ended December 31, 2006 were derived from the audited
consolidated financial statements of Comstar UTS as of December 31, 2006, 2005
and 2004 and for the years then ended and should be read in conjunction with
these statements. Certain prior year amounts have been reclassified to conform
to the 2007 presentation.

Attachment C

"COMSTAR - United TeleSystems" OJSC

UNAUDITED CONSOLIDATED

PRO FORMA (*) INCOME STATEMENTS

-0-
*T
(US$ thousand, except Three months ended Years ended
for share and per December 31, December 31,
share amounts)
----------------------- -----------------------
2007 2006 2007 2006
(pro forma) (pro forma) (pro forma) (pro forma)

Operating revenues $401,581 $283,792 $1,481,522 $1,110,269
Operating expenses,
excluding
depreciation and
amortisation and
stock bonus, net (237,164) (186,879) (853,961) (689,671)
Depreciation and
amortisation (53,710) (39,209) (170,752) (130,155)
Stock bonus - (62,139) - (62,139)
Other operating gains - - - 7,616

----------- ----------- ----------- -----------
Operating income /
(loss) 110,707 (4,435) 456,809 235,920

Interest income 5,141 7,788 15,052 43,536
Interest expense (14,489) (8,282) (53,440) (22,042)
Change in fair value
of derivative
financial instrument
(call and put option) 66,364 (60,000) (145,859) (60,000)
Impairment of long-
term investments (22,691) - (22,691) -
Foreign currency
transactions
(loss)/gain, net (678) 4,813 (4,543) 19,885
Gain from disposal of
an affiliate - - 3,216 -

----------- ----------- ----------- -----------
Income / (loss) before
income taxes, income
from affiliates and
minority interests 144,354 (60,116) 248,544 217,299

Income tax expense (18,188) (14,576) (111,001) (72,479)
Income from affiliates 264 1,246 2,691 3,292
Minority interests (74,602) 10,323 (96,421) (65,616)

----------- ----------- ----------- -----------
Net income / (loss) $51,828 $(63,123) $43,813 $82,496

Weighted average
number of common
shares outstanding -
basic 404,456,856 358,854,278 369,880,471 345,805,894
Earnings / (loss) per
common share - basic $0.13 $(0.18) $0.12 $0.24
Weighted average
number of common
shares outstanding -
diluted 425,236,318 358,854,278 387,235,812 346,083,856
Earnings / (loss) per
common share -
diluted $0.12 $(0.18) $0.11 $0.24
*T

(*) Unaudited consolidated pro forma income statements are prepared on the basis
of consolidation of the income statements of the acquired companies from the
date of acquisition selected for accounting purposes and not from the beginning
of the year (current policy of Comstar).

(1) Cash CAPEX includes cash spent on acquisition of property, plant and
equipment and intangible assets.

(2) Newly acquired subsidiaries are consolidated from the beginning of the year
in accordance with Comstar's accounting policy. Pro-forma information is
adjusted to include the results of the acquired subsidiaries from the date of
acquisition - see Attachment C to this statement.

(3) MGTS received payments from the Federal Budget by way of reimbursement for
discounts provided to certain categories of low income residential subscribers,
including pensioners and military veterans, under the terms of pre-2005
legislation. MGTS does not now provide such discounts and receives full tariffs
from virtually all of its subscribers.

(4) The average exchange rate for the period was RuR 24.6499 per US$ 1 in the
fourth quarter of 2007; RuR 26.5905 per US$ 1 in the fourth quarter of 2006; RuR
25.5157 per US$ 1 in the third quarter of 2007; RuR 25.577 per US$ 1 for the
twelve months of 2007; and RuR 27.1852 per US$ 1 for the twelve months of 2006.

(5) Operating expenses, excluding depreciation and amortisation and stock bonus,
net

(6) Please refer to Attachment A.

(7) Penetration is calculated as % of households - source: Company data, Pyramid
Research, J'son & Partners

(8) The quarter on quarter decline in installed capacity is attributable to the
ongoing digitalization of the network and, therefore, the temporary simultaneous
existence of analogue and digital lines at the end of the fourth quarter of 2006
and third quarter of 2007.

(9) Including 18% VAT, US$ 15.6 and US$ 14.1, respectively, using the Bank of
Russia exchange rate as at February 1, 2008

(10) Source: Direct Info

(11) Calculated as total debt, as at the balance sheet date, divided by OIBDA
for the twelve months preceding the balance sheet date.

Comstar UTS

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