Corporate presentation September 2007 Corporate presentation September 2007

Corporate presentation September 2007

Corporate presentation September 2007 Comstar at a Glance § The leading combined fixed-line telecommunications company in Moscow § - MGTS incumbent & Moscow Alt. Net with >5 million active lines & > 11, 000 km fiber-optic network § Owner of “last mile” access to 3. 6 million Moscow households & 98% market share § - Last mile is not unbundled and > 90% ADSL compatible § Number 1 residential broadband provider in Moscow § - > 426 k subscribers & 33% market share § Integrated operator providing full spectrum of fixed-line services § - local, long distance through sister company MTT, broadband Internet, Wi. Fi, Wi. Max, VPN etc § Owner of 25% + 1 share in state-owned Svyazinvest national fixed line incumbent § - Financial investment with upside as strategic player in privatization process § Regional expansion § - Focus on priority regions with expansion through selective M&A & cooperation with Sistema companies 2

Corporate presentation September 2007 Combined Telecom Operator Comstar-UTS 56% economic interest Moscow City telephone (MGTS) ILEC Moscow fixed line incumbent 4. 3 million active lines Provider of basic services to mass market 100% subsidiary Fixed Line Moscow CLEC 0. 6 mln active lines Provider of multi-service solutions to corporate & developers 52% ownership Broadband Moscow Sister companies 100% subsidiaries Regions & International 25% +1 share Svyazinvest CLEC STATE #1 broadband 92, 000 HOLDING provider in subscribers 7 ILECs, Moscow with Provider of voice Rostelecom, 33% market services to Central share corporate & Telegraph 426, 400 developers 32 million residential installed lines subscribers covering 90% 23% double-play of Russia penetration (data & pay-TV) 52. 8% owned by Sistema Mobile Tele. Systems MOBILE OPERATOR The largest mobile operator in Russia and the CIS Cooperation with Comstar. UTS: joint use of network infrastructure, convergent projects, joint sales efforts 50% owned by Sistema Multiregional Transit Telecom ILD/DLD OPERATOR Owner and operator of a digital multiservice nationalscale network whose nodes are installed in all 88 subjects of RF Cooperation with Comstar. UTS: DLD/ILD services to Comstar-UTS 3 clients

Corporate presentation September 2007 Proven Track Record Revenues 26% GR = CA OIBDA 1, 120. 2 907. 6 695. 1 589. 2 189. 9 438. 8 MGTS 3% 428. 6 * R = 2 CAG 235. 7 358. 8 249. 9 * Excluding US$ 62. 1 million non-recurring stock bonus awards Inter-company eliminations Alternative operators By 2011 revenue growth will be driven by the development of broadband fixed-line services to residential and corporate users 4

Corporate presentation September 2007 Markets with Still Low Penetration Levels Fixed Voice Penetration (2006) Internet Penetration (2006) Note: Penetration in all charts calculated as % of households Source: Company data, Pyramid Research, stats agencies, Direct INFO PC Penetration (2006) Broadband Penetration (2006) 5

Corporate presentation September 2007 Strategic Objectives “Creating a World Class Integrated Full Service Telecommunications Provider & the Pan-Russian Wire-line Champion” ● Leveraging incumbent infrastructure & unique last mile access through network upgrade & co-marketing ● Increasing broadband market share & ARPU through subscriber acquisition & expanded service offering ● Driving regional and CIS expansion through cooperation and acquisition ● Unlocking operational potential by enhancing efficiency levels through integration, restructuring & extracting synergies ● Simplifying structure by streamlining management & eliminating cross holdings & minority interests ● Capitalising on Svyazinvest stake as a financial investment and through participation in privatization 6

Corporate presentation September 2007 Leveraging Incumbent Infrastructure & ‘Last Mile’ Access • Growth in Regulated Tariffs (US$) June 30, 2007 Time-based tariff plan (RU 125 + RU 0. 28 per minute) 26% Combined tariff plan (RU 229 for 370 minutes then RU 0. 23 per minute) 22% Unlimited time tariff plan (RU 380 per month) 52% MGTS IS the infrastructure provider: • • network development & modernization network support • • • Management by processes • Refocused investment program Strategic activities will be transferred to Comstar Significant headcount reduction Growing number of lines per employee and productivity Control over the split of subscriber base between three tariff plans- client oriented approach • Selective modernization of the last mile (FTTx) will lead to increased speeds for premium clients and increased capacity • Digitalization: 45% of lines are digital at the end of the 1 H 2007 - transition to Next Generation Network, financed by disposal of freed up real estate, is a technological necessity, will decrease opex & capex 7 per line

Corporate presentation September 2007 Moscow’s Leading Alternative Network Solution Provider for Corporate Clients Moscow Corporate Market, 2006 (US$) Source: Direct INFO, in terms of sales • Services to large and medium-sized clients • Individual approach • Introduction of standards for VIP clients • Addition of long-distance services to provide full-scale of integrated services • VPNs for clients with regional branches • Cross sell of Comstar-Moscow services to MGTS corporate client special tariffs • Services to Small and Medium Enterprizes • Bundled products • Development of sales channels • Active promotion • Services to developers • Multi-service solutions for business-centers • Segmentation of client base (Comstar. Moscow- premium & business segment, MGTS & Comstar-Direct- low segment, largescale development Bundle of services, coordination of tariff policy and marketing initiatives will lead to an increase in ARPU & client base, decrease in churn outside the Group 8

Corporate presentation September 2007 Increasing Broadband Market Share & ARPU Moscow Broadband & Pay-TV Penetration Moscow Residential Broadband Market, 2 Q 2007 Total: 1. 3 mn subs 426 thousand subs Source: Company data, Direct INFO, Pyramid Research Note: CAGR represents growth in projected users. Penetration calculated as % of households Comstar Direct Residential Subscribers (‘ 000 s) Broadband • • • #1 provider with 33% market share in Moscow Objective of >50% market share in Moscow by 2011 > 90% of MGTS lines are ADSL compatible 42% year on year growth in customer base 23% double play penetration • Measures to boost broadband net adds • Enhancing sales channels: • Optimization of sales channels • Direct marketing/sales to MGTS subscribers • Investing into future development: • ‘Fibre to the Curb/Home’, Wi. Fi, Wi. Max initiatives • Client orientation • Call center capacity > doubled, IVR Dial up 9

Corporate presentation September 2007 Driving Regional Expansion Current presence of Comstar-UTS • Development of operating clusters around regional branches through • • • M&A targeting leading regional CLECs to complement Svyazinvest presence and increase footprint Cooperation with sister companies Upside of engagement in Svyazinvest privatisation process Sochi alternative fixed-line market* • • Tyumen region Saratov region Volga region South region Saint Petersburg Armenia Ukraine Saratov region alternative fixed-line market** *Source: Сomstar-UTS estimates, in terms of sales, 2007. excl. ILECs and Transtelecom **Source: Direct INFO, in terms of sales, 2006 Tyumen region alternative fixed-line market** 10

Corporate presentation September 2007 Unlocking Operational Potential ● ● ● Digitalization of MGTS network - transition to Next Generation Network, financed by disposal of freed up real estate, is a technological necessity, will decrease opex & capex per line Optimization of the Group’s structure- separating core functions from non-telecom-related, reduction in headcount Outsourcing of non-core functions Management by processes Integration of newly acquired operations & expansion of margins Number of MGTS Employees Lines / Employees (‘ 000 s) 11 Source: Deutsche UFG

Corporate presentation September 2007 Simplifying Organizational Structure Shareholder Meeting Free Float incl. GDRs 35% Ownership JSC Sistema MGTS • Setting KPIs & overseeing execution • Assisting with M&A / negotiations 14% Ownership 51% Ownership Audit Committee Board of Directors Strategy Committee 9 Members Remuneration & Nomination Committee 3 non-executive independent Directors Budget & Investment Committee Corporate Governance Committee Technical 띸 ٲ mmittee Management Board Tariffs Committee Purchasing Committee 12

Corporate presentation September 2007 Simplifying Ownership Structure Objective Now Free float 35% Regional branches & subsidiaries 51% 48% 14% 52% 56% 17. 3% 7. 7% 23% • Elimination of cross ownership between MGTS and Comstar • • • Consolidation of MGTS minorities Integration of Comstar Direct Participation in restructuring / privatization of Svyazinvest 21% Other 13

Corporate presentation September 2007 Capitalizing on Svyazinvest Investment • • • § 25% plus one share stake acquired for US$ 1. 3 billion in December 2006 - Comstar acquired 17. 3% & MGTS Finance acquired 7. 7% Call (by December 2007) and put (2 year) option agreement with seller for 11% of Comstar shares currently held by MGTS Finance Represented by 2 seats on Board of Directors Successful financial investment with >50% increase in combined market cap of listed assets from US$ 5. 8 billion in December 2006 to US$ 8. 8 billion in July 2007 Upside option as Strategic Player in privatization process Svyazinvest companies: § Center Telecom § North-West Telecom § Uralsvyazinform § Volga. Telecom § Sibir. Telecom § South Telecom § Far East Telecom § Rostelecom +28% economic interest / 23% voting interest in MGTS 2006 highlights • Revenue US$ 7. 7 billion • EBITDA US$ 2. 3 billion • Net income US$ 0. 2 billion • Employees 273. 4 thousand 14

Corporate presentation September 2007 Combining Growth & Profitability Source: Company reports 15

Corporate presentation September 2007 The Investment Opportunity USD 1. 79 billion USD 3. 66 billion USD 4. 26 billion Comstar Market Cap USD 2. 48 billion 21. 6% of Svyazinvest Comstar Market Cap ex Svyazinvest USD 5. 18 billion USD 3. 15 billion EV/EBITDA 20071 5. 2 x EV/EBITDA 2007 8. 8 x 6. 0 x 8. 5 x Comstar Valuation at Altnet ILEC Broadband Multiples EV ¹Source: Consensus (Morgan Stanley, URALSIB, Goldman Sachs, Deutsche UFG, Troika Dialog, Aton Capital, Alfa Bank, ING, Renaissance Capital, Dr. KW, Credit Suisse, FIM) All data as at 07 September 2007 USD 5. 36 billion 16

Corporate presentation September 2007 Investment Case ● Scale player with market leading positions & track record of balancing growth & profitability - > US$ 1. 1 billion revenue fixed-line operator with > 20% revenue growth & ~ 40% OIBDA margin ● Well positioned convergence play on incumbent infrastructure, alt net development & increasing broadband penetration in high growth markets ● Expanding service offering & geographical footprint ● Substantial synergies and efficiency gains to be extracted from integration of the companies of the Group ● Simplification of structure unlocks significant value ● Upside potential from: - Buying out minorities in key assets (MGTS, Comstar Direct) - Svyazinvest privatisation - Addition of LD service to corporate service package - Realisation of property portfolio 17

Corporate presentation September 2007 Summary Financials 18

Corporate presentation September 2007 Income Statement Half Year Highlights ● 32% year on year revenue growth ● 42. 9% OIBDA margin ● US$ 14. 5 million change in fair value of call and put option 19

Corporate presentation September 2007 Q 2 2007 Results 20

Corporate presentation September 2007 Segmental Breakdown * Excluding US$ 62. 1 million Stock Bonus Awards 21

Corporate presentation September 2007 Cash Flow Statement 22

Corporate presentation September 2007 Balance Sheet Half Year Highlights ● ● US$ 675 million 6 month loan facility arranged in December 2006 with ABN AMRO Bank N. V. Refinanced in June 2007 with 5 year RUR 26 billion credit facility from Sberbank Total debt of US$ 823. 5 million Net debt of US$ 675. 3 million 23

Corporate presentation September 2007 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@comstar-uts. ru 24