OREANDA-NEWS. November 14, 2007. “COMSTAR – United TeleSystems” JSC (“Comstar” or “the Company”) (LSE: CMST) today announced that it has completed the acquisition of 87.5 % of the share capital of Regional Technical Centre (“RTC”), an alternative regional fixed-line telecommunications operator in the Khanty-Mansi Autonomous Area, for a total cash consideration of US$ 21.0 million. The company was purchased from affiliates of TNK-BP Holding.

RTC provides fixed-line telecommunications services, radio access, mobile services in NMT-450 and CDMA standards, dial-up internet access, and leases channels to residential and corporate clients in Niznevartovsk, Surgut, Nyagan, Orenburg and Orenburg region. The company also has branches in Saratov, Ryazan and Moscow. RTC provides services to 8,319 subscribers, including 2,460 corporate clients in the Khanty-Mansi Autonomous Area and 1,813 subscribers, including 229 corporate subscribers in Orenburg region as at the end of the third quarter 2007. RTC has 33,012 active lines which account for 53% of the installed numbering capacity. The company reported revenues from telecom services of  US$ 18.2 million, up by 11% year-on-year,  with OIBDA margin of 28% and net income of US$ 2.3 million as at December 31, 2006.

The acquisition of RTC will strengthen Comstar’s presence in the telecommunications market of the Khanty-Mansi Autonomous Area, where it already operates through its subsidiary, Tyumenneftegassvyaz (“TNGS”), the second largest alternative fixed-line telecommunications operator in the region with over 43,000 subscribers. Following the new acquisition, Comstar’s share in the Khanty-Mansi Autonomous Area will increase from approximately 24% as at the end of 2006 to 33%[1].

Comstar UTS plans to integrate RTC and Tyumenneftegassvyaz into its Tyumen branch. The companies have similar business models, subscriber bases and revenue structures. They provide a comparable range of services and use similar sales techniques. The integration will reduce combined operating expenses by eliminating duplicate functions and optimizing the product line. The integration will therefore increase Comstar UTS’ operating profitability in the Siberian region.

Sergey Pridantsev, President and Chief Executive Officer of Comstar UTS, commented: “The acquisition of RTC is the next step in the progression of our regional growth strategy of consolidating local market leaders. We see the Khanty-Mansi Autonomous Area as one of the key strategic regions with a high growth potential. The market size in 2007 is estimated at US$ 255 million, growing 8.4% year-on-year. The integration of the newly acquired operator into our Tyumen branch and the launch of a zonal telephone network will help us to expand our presence not only in this area but also in neighbouring regions of the Russian Federation.”