OREANDA-NEWS. On 6 February 2008  “COMSTAR – United TeleSystems” JSC, the leading combined telecommunications operator in Russia and the CIS, announced its business development strategy for the Southern Federal District of Russia.

As part of this strategy, Comstar will create a new regional division called “Southern Branch”, which will be comprised of the Group’s subsidiaries and subdivisions in the Southern Federal District of Russia. The Southern Branch will utilise the existing infrastructure of Comstar’s subsidiary in the Rostov region, Digital Telephone Networks South (“DTN”), and the regional offices of the Branch will be created in the cities where Comstar is already present.

The Branch will be managed in accordance with Comstar’s unified business development strategy. A horizontal management infrastructure will be put in place and will be comprised of Commercial, Financial, Technological and Marketing departments.

Viktor Koresh, Vice President for Regional Development, commented: “Once we have completed the reorganisation of our operations in the Southern Federal District, we will be the most powerful alternative telecommunications operator in the region, with a modern technological base and a full range of telecommunications services. These changes are being implemented within the framework of Comstar’s broader regional strategy, which is aimed at streamlining the business processes of all our subsidiaries and integrating these companies within the unified structure of the Comstar Group.”

The Company’s investments in the telecommunications services in the South of Russia are expected to reach approximately US$ 20 million in 2008, with US$ 15 million of this amount to be allocated for the development of DTN’s business.

According to the Company’s estimates, its business in the South of Russia will grow at significantly faster rate than the overall regional telecommunications market in 2008, including by the volume of services to residential and corporate clients.

In 2008, DTN will focus on securing its leading position in the alternative telecommunications market, as well as growing its broadband internet subscriber base and expanding its activities in the cable TV market. DTN intends to launch its IPTV services in the first quarter of 2008 and will begin providing triple-play services by the end of 2008.

Mikhail Monastyrsky, Director of DTN, commented: “We are planning to maintain our relationships with existing clients and expand our offerings utilizing Comstar’s experience in this area. Internet access and pay-TV services are expected to generate the largest portion of our revenues in the next several years.”

The Krasnodar Territory and the city of Sochi are among the main areas of Comstar’s activity in the South of Russia. The South Branch integration strategy is aimed at increasing the existing network resources, the building of NGN networks and the launch of digital TV based on HDTV standards, which are expected to be implemented in 2008. In the first half of 2008, Comstar plans to finalise the creation of Sochi’s telecommunication infrastructure development project in cooperation with Intellect-Telecom. This project is expected to be completed by 2014.

In 2008, Comstar intends to start building its Moscow – Rostov-on-Don backbone. This project will assist the Company in reducing its capital expenditure and also provide more attractive broadband tariffs (including IPTV) for customers in the Rostov region and Krasnodar Territory.