MGTS Annual Shareholder Meeting Approves Dividend Payment for 2006

"COMSTAR – United TeleSystems” JSC ("Comstar”) (LSE:CMST), the leading combined telecommunications operator in Russia and the CIS, today announced the decisions made at the Annual General Meeting of Shareholders ("AGM”) of its 55.73% owned subsidiary, Moscow City Telephone Network ("MGTS”). The meeting was held today, on June 29, 2007. The AGM approved an annual dividend of approximately RUR 1.3 billion, or approximately US$ 51.5 million, for the twelve months ended December 31, 2006, to holders of MGTS shares as at the record date of May 12, 2007. The dividend, which amounts to a payment of RUR 8.75 per ordinary share (approximately US$ 0.34), and of RUR 39.77 per preferred share (approximately US$ 1.54), is due to be paid by the end of 2007. The total dividend payment to holders of ordinary shares will amount to approximately RUR 698.5 million (approximately US$ 27.0 million), which represents approximately 11% of MGTS’ net income for 2006 under Russian Accounting Standards (RUR 6.3 billion or US$ 245.3 million). The total payment to holders of preferred shares will amount to approximately RUR 635.0 million (approximately US$ 24.5 million) and represent approximately 10% of MGTS’ net income. The AGM upheld the decision of the previous AGM, held on June 17, 2006, not to pay an annual dividend for the twelve months ended December 31, 2005. The shareholders approved the election of the members of the Board of Directors as follows: 1. Kirill Andreychenko – Deputy General Director for Corporate Development, Sistema Telecom. Mr. Andreychenko was nominated by Comstar UTS. 2. Boris Antonyuk – Deputy Minister for Information Technologies and Communications of the Russian Federation. Mr. Antonyuk was nominated by Svyazinvest. 3. Leonid Varakin – President, International Telecommunication Academy. Mr. Varakin was nominated by Comstar UTS. 4. Alexey Goncharuk – Vice President, Operations Director, Comstar UTS. Mr. Goncharuk was nominated by Comstar UTS. 5. Alexander Gorbunov – Vice President for Strategy and Development, Comstar UTS. Mr. Gorbunov was nominated by Comstar UTS. 6. John Julian Maloun – Head of Moscow brand of VEUS Holding. Mr. Maloun was nominated by Lindsell Enterprises Limited 7. Alexander Kiselev – General Director of Svyazinvest. Mr. Kiselev was nominated by Svyazinvest. 8. Vladimir Lagutin – former general Director of Sistema Telecom. Mr. Lagutin was nominated by Comstar UTS. 9. Vladimir Malyavin – General Director, Comstar Direct. Mr. Malyavin was nominated by Comstar UTS. 10. Oleg Mukovozov – Director for Corporate Management, Comstar UTS. Mr. Mukovozov was nominated by Comstar UTS. 11. Victor Savchenko – Executive Director, Director of Corporate Management and Legal Department, Svyazinvest. Mr. Savchenko was nominated by Svyazinvest. 12. Nikolay Tokarev – Chief Financial Officer, Comstar UTS. Mr. Tokarev was nominated by Comstar UTS. At the statutory Board meeting following the AGM, the MGTS Board of Directors appointed Vladimir Lagutin as Chairman. Deloitte & Touche CIS was appointed as independent auditor for 2007. *** For further information, please visit www.comstar-uts.com Comstar UTS is the leading combined telecommunications operator in Moscow and the Moscow region, 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 unique last mile access to 98% of Moscow households. The Company also offers communications services in several Russian regions, CIS and Eastern European countries. Comstar had 3.6 million MGTS subscribers, almost 40,000 Comstar Moscow subscribers, nearly 500,000 Comstar Direct Internet subscribers, and over 90,000 regional and international subscribers, as at March 31, 2007. Comstar UTS reported increased operating revenues of US$ 329 million and consolidated assets of US$ 3.67 billion for the three months ended March 31, 2007. Comstar securities are listed under the symbol "CMST” on the Moscow Stock Exchange and 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.