RUSSIA’S COMSTAR ACQUIRES ARMENIAN TELECOM GROUP

RIA Novosti, Russia
Oct 30 2006

MOSCOW, October 30 (RIA Novosti) – Comstar United TeleSystems [RTS:
CMST], one of Russia’s largest telecommunications operators, said
Monday it has acquired a controlling stake in Armenia’s CallNet and
its 100% subsidiary Cornet.

Comstar has purchased 75% plus one share, with an option to acquire
the remaining stake in the group.

CallNet, which provides transit operator services between networks,
and Internet service provider Cornet, comprise the second largest
telecommunications group in Armenia. Cornet has a fast-growing customer
base, including 76% of the banking sector in Armenia. In 2005 the
group’s consolidated revenue doubled year-on-year to $4.3 million.

Eric Franke, CEO and President of Comstar UTS, said that the purchase
was part of an investment and expansion plan announced by the company
earlier in October. It follows a June 2006 agreement between Comstar
and Ukraine’s Neotel to set up a Comstar subsidiary in Ukraine.

Comstar UTS, formed in November 2004 through a merger of Comstar,
MTU-Inform and Telmos, said its strategic vision was focused on further
growth of its top line using the group’s resources, cross-selling to
existing and new customers of the whole range of products and services,
accelerating regional expansion, and introducing performance-based
compensation systems.

Comstar’s main shareholder is AFK Sistema [RTS: AFKS], which holds
a 54.58% stake.