OREANDA-NEWS. January 18, 2008. “COMSTAR – United TeleSystems” JSC  (LSE: CMST), the leading integrated telecommunications operator in Russia and the CIS, today announced that its fourth quarter 2007 financial results will be impacted by a non-cash gain of approximately US$ 60.8 million. The gain arises from the quarterly revaluation of the call and put option issued in part payment for the acquisition of a 25% plus one share stake in telecommunications investment company ‘Svyazinvest’ in December 2006. The call element of the option was exercised on December 7, 2007 and, therefore, has no impact beyond that date.

The put option remains in place for up to two years but has far less impact on Comstar’s income statement. The non-cash gain will be reported below the Operating Income line and above the Income before Tax line of the Company’s income statement. The impact on the Company’s fourth quarter Net Income will be reduced by the minority interest in the gain and total approximately US$ 33.9 million.

The non-cash impact comprises a non-cash gain of approximately US$ 55.8 million from the revaluation of the call and put option as at the close of trading of the Company’s Global Depositary Receipts on December 7, 2007, and a US$ 5.0 million gain from the change in value of the put option over the remaining few weeks of the quarter.

The Company’s full year 2007 financial results will therefore include a non-cash charge of approximately US$ 151.4 million, which is reduced by the minority interest to a non-cash charge of approximately US$ 84.4 million against Comstar’s net income for the twelve months ended December 31, 2007.