Corporate presentation

1
Corporatepresentation

• April 2007

2
Corporate presentation April 2007
Disclaimer
Matters discussed in this presentation may
constitute forward-looking statements.
Forward-looking statements include statements
concerning plans, objectives, goals, strategies,
future events revenues or performance, and
underlying assumptions and other statements,
which are other than statements of historical
facts. The words believe, expect,
anticipate, intends, estimate, forecast,
predict, could, plan, project, will,
may, should and similar expressions identify
forward-looking statements. Forward-looking
statements include statements regarding
strategies, outlook and growth prospects future
plans and potential for future growth liquidity,
capital resources and capital expenditures,
financing needs, plans or intentions relating to
acquisitions, our competitive strengths and
weaknesses, growth in demand for our products
economic outlook and industry trends
developments of our markets legal trends and the
impact of regulatory initiatives and the
strength of our competitors. The forward-looking
statements in this presentation are based upon
various assumptions, many of which are based, in
turn, upon further assumptions, including without
limitation, management's examination of
historical operating trends, data contained in
our records and other data available from third
parties. Although we believe that these
assumptions were reasonable when made, these
assumptions are inherently subject to significant
uncertainties and contingencies which are
difficult or impossible to predict and are beyond
our control and we may not achieve or accomplish
these expectations, beliefs or projections. In
addition, important factors that, in our view,
could cause actual results to differ materially
from those discussed in the forward-looking
statements include the achievement of the
anticipated levels of revenues, profitability and
growth, cost and synergy of our recent
acquisitions and restructuring, the timely
development and acceptance of new products, the
impact of competition and competitive pricing,
the ability to obtain necessary regulatory
approvals and the ability to fund our future
operations and capital needs through borrowing or
otherwise, the ability to successfully implement
any of our business strategies, the ability to
integrate our business and to realize anticipated
cost savings and operational benefits from such
integration, our expectations about growth in
demand for our products and services, the effects
of inflation, interest rate and exchange rate
fluctuations, and our success in identifying
other risk to our business and managing the risk
of the aforementioned factors, the condition of
the economy and political stability in Russia and
the other markets of operations and the impact of
general business and global economic
conditions. Neither we, nor any of our respective
agents, employees or advisors intend or have any
duty or obligation to supplement, amend, update
or revise any of the forward-looking statements
contained in this presentation. The information
and opinions contained in this presentation are
provided as at the date of this presentation and
are subject to change without notice.

3
Comstar at a Glance

• The leading combined telecommunications company
  in Russia and CIS (incumbent in Moscow and
  leading alternative operator with presence
  outside Moscow)
• Completed vertical integration of all divisions
  and successful rebranding in 2006
• Comstar provides fixed line telephony, broadband
  internet and multi-service telecom solutions to
  residential and corporate clients in Moscow,
  regions and internationally through its five
  business units
• MGTS
• Comstar-Direct
• Comstar-Moscow
• Comstar-Regions
• Comstar-International

Traditional segment
3.6 million residential and 73.000 corporate subs
500,000 residential internet subs
34,000 corporate subs
Alternative segment
Presence in 5 regions, licenses, WiMax frequences
Presence in Ukraine, Armenia and Greece, WiMax
frequences, synergies
4
Proven Track Record Of Delivering Results
Revenues (US in mln)
OIBDA (US in mln)
1,120.2
428.6
907.6
358.8
695.2
250.0
589.2
236.0
190.0
438.7
Traditional segment
Alternative segment
Intercompany eliminations

• Underlying OIBDA up 19 year on year to US 428.6
  million with underlying OIBDA margin of 38.3
• In Traditional 44.3
• In Alternative segment 18.1
• Restructuring charge US 3 million
• CPP added US29 million in costs
• Provision for Rostelecom traffic US 6 million

• Revenues up 23 year on year to US 1.12 billion
• In Traditional segment up 29
• In Alternative segment up15
• CPP added US36 million in subscriber revenue
• Companies, acquired in 2006 added US 11.4 million

5
2006- Breakthrough Year

• Successful IPO on LSE raising 1 billion for 33
  of shares
• Successful rebranding of all the companies of the
  Group
• New international management team in place
• Regulatory changes successfully adopted
• Increase in ownership in MGTS by 9 to 56,
  181.4 million spent
• Successful restructuring of the business
  operating units separated from corporate center
• Optimization of Alternative segment headcount
  reduced by 277, rented office space reduced by
  3,400 square meters, management layers reduced
  from 8 to 4, 3 billing systems being integrated,
  ERP system being launched
• Creation of Corporate Center
• Share option programme for Directors and
  top-management launched
• New KPI-based motivation system for the employees
  introduced
• International expansion launched with 4
  acquisitions in Ukraine and Armenia
• Election of two independent directors, Dietmar
  Kuhnt and Yngve Redling
• 4 BoD committees established strategy, audit,
  corporate governance and remuneration
• First combined sales and service office opened
  for Comstar Direct and MGTS
• Acquisition of 25 1 share in Svyazinvest for
  1.4 billion including call and put option
• Arrangement and utilization of US 675 million
  loan facility

6
Combined Telecom Operator
COMSTAR-UTS CORPORATE CENTRE
25 1
Svyazinvest
Moscow region
Regions
International
52 (48 owned by SMM)
67 voting 56 economic
100
(Comstar-International)
(Comstar - Direct)
(Comstar-Regions)
(MGTS)
(Comstar-Moscow)

• CLECs
• Multi-service solutions
• to corporate clients/elite housing

• CLEC
• Broadband Internet
• IPTV (double play)
• Other VAS
• Dial-up
• to residentials an corporates

• CLECs
• Multi-service solutions
• to corporate clients/elite housing

• ILEC
• Regulated voice
• VAS
• to residentials and corporates
• Wholesale access
• Interconnect
• to other operators

• CLEC
• Multi-service solutions
• to corporate clients/elite housing

Operations are divided into five business lines
with clear PL responsibilities
7
MGTS Fixed Line Incumbent in Moscow
Total MGTS Revenue (US million)1

• MGTS and Comstar-Moscow are using the combined
  backbone (11,000 thousand km of fiber)
• Last mile 98 share of residential installed
  access lines in Moscow 100,000 km of copper 41
  of lines digital (94 by 2010) direct upgrade to
  NGN. No local loop unbundling in the mid-term
• NGN network infrastructure investments to
  increase non-regulated services single backbone
  for MGTS and Comstar
• Use of MGTS real estate US 7.6 million gain
  from sale of 1 switching center in 2Q06. Further
  sales- early 2009. Total 114 switches to be
  renovated and partially freed up through 2012
• Employee reduction program approx. 1,400 to
  16,189 number of lines per employee expected to
  increase by 45 from 268 by 2010
• Client orientation single customer care number
  first combined sales center with Comstar Direct
  (six more to open in 2007)

1 Including intercompany
Number of Employees
8
MGTS Fixed Line Incumbent in Moscow (2)

• Market deregulation first step - introduction of
  per minute billing- from Feb.1, 2007 followed by
  active marketing initiatives
• Time-based tariff125 RuR 0.28 RuR per minute
  (4.70.01 per minute)
• Combined tariff 229 RuR for 370 min 0.23 RuR
  per minute when the limit is exceeded
  (8.70.009)
• Unlimited tariff 380 RuR (14.4)
• New tariff structure and additional revenue
  sources tariff rebalancing CPP added US 32.9
  million in 06 Budget reimbursements received
  US 25.8 million in 2006, another US 36 million
  to be received in 2007
• Tariff rebalancing
• Based on most recent data, 84 of subscribers
  chose new tariff plans, the remaining 16 were
  added to unlimited plan by default
• Among 84 of subscribers who made a choice 42.3
  chose unlimited plan 26.9 - combined, and
  30.8 - per minute
• New services (SMS from fixed line)

Growth in Regulated Tariffs (in USD)1
US7.6
1Before the introduction of per minute tariffs
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One-stop-shop

• Successful rebranding of all operating companies
• One-stop-shop concept in servicing residential
  customers
• 1st combined and service office opened in
  December 2006, six more to open in 2007
• Cross-sales and synergies

10
Comstar-Moscow - Leading Alternative Provider

• 19 share on the Moscow corporate market
• Restructuring and CLECs integration in 2006
  resulted in substantial savings reduction of
  labour force by 20 in November December 2006,
  office space reduced by 3400 square meters,
  expected savings of US 8 mln from 2007. Further
  cost efficiency targets
• optimisation of existing network and cost
  structure (office rent, centralized purchasing)
• Single NGN network with MGTS targeted Capex
  spending
• Key drivers business centers and hi-end real
  estate developments show good growth potential
• Introduced new services IP-VPN, Hybrid VPN,
  WiFi telephony and Logic Line, aimed at better
  ARPUs
• Comstar and MTT signed an agreement to provide
  wireless access through Comstars Wi-Fi network
  to MTTs roaming partners via WLAN roaming to
  Russian and foreign mobile operators and Wi-Fi
  providers, with effect from the third quarter of
  2007.
• Cooperation with MGTS to provide wireless Wi-Fi
  connection through coin-box telephones network in
  Moscow (approx. 200 by the end of 2007)

Corporate Revenues of Alt. segment (US million)
CAGR 15
Corporate Market in Moscow (2006) 1
Total US 2.16 bn
1 Source Direct Info (by revenue), Comstar
market share includes MGTS (10.3) and
Comstar-Moscow (8.2) corporate clients
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Comstar-Direct

• Comstar-Direct controls 38 market share of
  broadband in Moscow where broadband penetration
  is at 26
• 44 growth in broadband customers YoY 38 market
  share in Moscow 3 double play 18 of PayTV
  market in Moscow
• Added subscriber 400,000 on April 16, 2007
• ARPL US 20.2, 7 YoY growth
• New services introduced competitive on price
  and speed
• Launch of IPTV
• VOD and gaming add-ons for broadband customers
• US 8/month and free ADSL modem offer for dial-up
  customers
• Leveraging Comstar group synergies
• First of seven combined sales office
• Segmentation of MGTS customer base - over 90 of
  lines are ADSL compatible, low levels of
  incremental capex
• Direct mailing to MGTS subs
• Joint call center with Comstar-Moscow
• Proprietary call center capacity doubled
• New reglament with MGTS to be introduced in June
  2007- to reduce connection time
• Targeted marketing campaigns
• Broadband penetration in Russia is still
  relatively low compared to CEE
• Growth drivers
• PC penetration

Internet Residential Subscribers (000) 1
ADSL
Dial-up
Double play (TV)
Broadband Penetration 2
1 Source Company data 2 Source Direct info,
2006, by number of households 3 Source Direct
Info, 2006, including home networks, using
Stream, by number of subs
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Markets and customers overview
Moscow Fixed-line Market Active Lines (By number
of lines, 2006)
34
68
4.3m active lines
0.6m active lines
Total 6.2m Lines
Moscow Residential Broadband Segment (By number
of subscribers, 2006)
Comstar-Direct, 38
Home networks,
32
360 thousand subs (ADSL Stream) 19 thousand subs
(home networks using Stream)
Total 0.99m Subs
Comcor (AKADO), 10 (cable)
Centel, 8 (cable)
Corbina, 12 (cable)
Source Direct INFO 38 including subs of home
networks (2) who connect up to Internet using
Comstar UTS channels
1 in residential broadband users,
alternative corporate segment by number of
lines in Moscow
13
Comstar-Direct- targeted marketing campaigns
14
Comstar-Direct- attractive tariffs
vs. average 33 kb/s for dial-up
Introduced on April18, 2007
15
Comstar-Regions

• Focus on top priority regions
• Currently present in St. Petersburg, Saratov,
  Tyumen, Samara and Sochi
• Digitalization completed at Tymenneftegazsvyaz in
  2006
• Cooperation with regional ILECs in Svyazinvest
  holding- the entire 2007 will be dedicated to
  building relationships with Svyazinvest
• Development outside Moscow through
• Selected MAs
• WiMax roll out subject to attractive business
  case
• Cooperation with regional incumbents
• Use of MTS network infrastructure where
  economically feasible
• Building license coverage key licenses obtained
  including for the use of wireless technologies
  and 5.15-5.35 GHz pre-WiMax frequences, for IP
  voice data transmission, for data transmission

St. Petersburg
Tymen
Moscow
Samara
Saratov
Sochi

33
Mln. US
Includes revenues outside Russia
16
Comstar-International

• Focused on metropolitan areas (Kiev and Odessa)
• Selective MA to expand geographical presence
• UMC/MTS broad cooperation
• WiMax licenses obtained
• Leading CLEC is acquired in 2006
• Unique WiMAX license for the entire country
• Subscription for 51 shares of a leading ISP in
  2006
• Attractive market with extremely low broadband
  penetration
• Strong local partners

UKRAINE

• 4 acquisitions of alternative operators in
  Ukraine and Armenia Callnet and Cornet
  (Armenia) and DG Tel/Technologic Systems
  (Ukraine) in 2006
• Subscription to 51 shares in Hellas on Line,
  third largest Greek fixed line and broadband
  provider (subject to Antimonopoly approval, not
  consolidated yet)

ARMENIA
GREECE
17
Svyazinvest acquisition of 25 plus one share

• Svyazinvest companies
• Center Telecom
• North-West Telecom
• Uralsvyazinform
• VolgaTelecom
• SibirTelecom
• South Telecom
• Far East Telecom
• Rostelecom
• 28 (23 voting) in MGTS

Source Svyazinvest
Call (6.97) and put option for 11 of Comstars
shares given to the Seller aimed at resolving
cross shareholding between Comstar and MGTS
Acquisition of Svyazinvest stake is both a
strategic bet and attractive investment with
opportunities to realize additional synergies
18
Svyazinvest strategy
Short Term
Medium Term
Long Term
Financial investment
Operating synergies
Strategicinvestment

• Increased efficiency
• Broadband development in the regions
• Negotiate access to the regional infrastructure

• 2 representatives on the BoD
• Changes to the charter
• Dividends
• Key strategic decisions
• Improved reporting

• Privatization / restructuring

• Buy out Svyazinveststake (23) in MGTS

Acquisition of Svyazinvest stake is both a
strategic bet and attractive investment with
opportunities to realize additional synergies
19
Value Oriented Strategy

• Completed integration of Moscow operations in
  2006
• Follow one company approach
• Synergies within group operations
• Customer segmentation

• 2 seats on BoD
• Buy out of MGTS stake
• Participation in Svyazinvest
• privatisation

7
2
Svyazinvest
Integration
1
Restructuring
6
3

• Deploying ADSL
• Rollout of extended offering (started with IPTV)
• Using favourable regulatory environment

• Developing unique market solutions
• Utilizing synergies with MTS
• Optimizing sales service functions

• Simplified legal structure
• Four business lines
• in PL

Broadband
Convergence
5
4

• NGN network and digitalization
• Realizing efficiency gains
• Monetising real estate assets

• Selective CLEC MA
• Deploying wireless technology
• Selective international expansion

MGTS Modernization
Regional Expansion
Integrated telecom solutions for all market
segments in Moscow and regions with growing share
of non-regulated revenues Increase in
contribution from regional operations leader in
offering of next generation services
20
Outlook for 2007

• Revenue growth in line with the growth in 2006
• Regulated tariff growth
• Growth in revenues from corporate data and
  internet
• Growth in revenues from residential broadband
  internet
• Approximately US36 million compensation from the
  budget in 2007
• OIBDA margin improvement from underlying level of
  38.3 before new acquisitions
• Restructuring and cost optimization programme
• MGTS tariffs
• Regulatory changes
• CapEx less than US350 million

21
Investment Case

• Combined telecom operator with robust growth,
  solid profitability and cash flow generation
  outlook
• Unique last mile used for bundled offerings
• Strategic shareholder in Svyazinvest (25 one
  share) with 2 seats on the BoD
• Established and growing regional (5 regions) and
  international presence (Ukraine, Armenia and
  prospectively Greece)
• Improved transparency of operations 5 PL lines
  and new segmental reporting structure from Q1
  2007
• Comstar enjoys synergies with sister companies
  MTT and MTS

22
Appendix
23
Profit and Loss Statement Selected Items

• 23 revenue growth YoY
• 38.3 OIBDA margin in 2006
• Stock bonus awards for US 62 million
• Change in fair value of call and put option US60
  million

24
Revenue Breakdown

• Traditional segment 29 revenue growth YoY
• Alternative segment 15 revenue growth YoY
• Broadband 54 revenue growth YoY
• Regions 33 revenue growth YoY
• CPP added US 36.3 million to the Groups revenue
  from subscribers

25
Cash Flow Statement Selected Items

• CFs from Operations of US 273.6 million
• US 976 million raised during the IPO in February
  2006 (net of respective costs)

26
Balance Sheet Selected Items

• In December 2006 Comstar arranged US 675 mln 6
  month loan facility with ABN AMRO Bank N.V. with
  interest rate at LIBOR plus 1.2. Loan can be
  extended to 12 months

27
4Q KPIs


1 Includes 3,605 subscribers who signed
contracts but were not connected to the service
as at December 31, 2006
28
Solid Macroeconomic Fundamentals
Real GDP Growth Forecasts (2005A-2011E CAGR)
Telecom Spending Growth Opportunity
Czech Republic US3.9bn
Hungary US4.1bn
Poland US8.7bn
Source EIU, January 2007
GDP/Capita (Purchasing Power Parity) 2005A
Russia US14.1bn
Ukraine US3.7bn
Source Pyramid Research (November 2005)
Source EIU, January 2007
The Russian market provides high growth potential
given expected real GDP growth and a relatively
under-penetrated telecoms market
29
Attractive Market Potential
Fixed Voice Penetration (2006)
PC Penetration (2006)
Broadband Penetration (2006)
Internet Penetration (2006)
Source Company data, Pyramid Research, stats
agencies, Direct INFO
Note Penetration in all charts calculated as
of households
Well positioned in favourable Market Conditions
30
Ample Opportunities In Broadband
Russia (ex-Moscow)
Moscow
Internet Penetration
Internet Penetration
05-10 CAGR 14.9
05-10 CAGR 34.3
Broadband Penetration
Broadband Penetration
05-10 CAGR 28.7
05-10 CAGR 42.6
Pay-TV Penetration
Pay-TV Penetration
05-10 CAGR 5.9
05-10 CAGR 33.0
Source Company data, Direct INFO, Pyramid
ResearchNote CAGR represents growth in
projected users. Penetration calculated as of
households
Significant growth potential in the Residential
Broadband and Pay-TV markets
31
Moscow Internet Market In 2006
Home Computers Penetration Level (2006)
Internet Penetration (2006)
Structure of Connections (2006)
100 3,867 households
62.4
100
18.6
18.9
31
Dial-up 36.9
not connected to Internet 41.2
connected to Internet 58,8
34
2,668 householdswitha computer
Broadband 63.1
69
100
8.1
9.9
11.6
36.4¹
1,570 households connected to internet
Source Direct INFO Note All household data
in 000s ¹ Number excludes subs of homenetworks
who connect up to internet using Comstar-UTS
channels (this would account for additional 2)
In 2006 almost 1.5m households in Moscow are
connected to the Internet. More than a half of
them use Broadband Internet
32
Regulatory Changes
Recent and foreseeable changes have no adverse
impact on fundamentals of Comstars business
33
Shareholder Structure
Free float incl. GDRs
35
Regional branches subsidiaries
51
48
52
141
56 econ.
23 econ.
21 econ.
2512
Other

• Optimization of ownership structure
• Integration of Golden Line into Comstar
• Turn 100 owned subsidiaries into branches

1 MGTS owns 14 of Comstar, as of Dec.12,2006 2
Including 7.7 owned by MGTS Finance
34
Contacts
For additional information please visit
www.comstar-uts.com or contact Masha
Eliseeva Head of Investor Relations Phone 7 985
997 08 52 E-mail ir_at_comstar-uts.ru