OREANDA-NEWS. May 28, 2010. “COMSTAR – United TeleSystems” OJSC (“Comstar” or “the Group”) (LSE: CMST), a largest integrated telecommunications provider in Moscow and 82 Russian cities, announced that Comstar, MGTS Finance S.A., a company controlled by Comstar, and OAO Rostelecom (Rostelecom, RTS and MICEX: RTKM, RTKMP; OTCQX: ROSYY) have concluded agreements involving the sale of the 25%+1 share[1] of OAO Svyazinvest to OAO Rostelecom for RUB 26 billion.

The proceeds of the sale will be used by Comstar to pay down its outstanding debt to Sberbank in the amount of RUB 26 billion.

The closing of the transactions is subject to satisfying of a number of conditions including, inter alia, obtaining the necessary corporate approvals by the parties involved, regulatory clearances, including those from the Federal Antimonopoly Service, and entering into the exchange transaction by AFK Sistema and Svyazinvest after completion of which Svyazinvest will control 100% of the share capital in SkyLink CJSC and AFK Sistema will acquire the 23.33% stake in OAO Moscow City Telephone Network (MGTS).

The agreements are in line with the previously announced non-binding Memorandum of Understanding (MOU) concluded by Comstar with Sistema and Svyazinvest on November 23, 2009.

The Comstar group of companies currently owns 25%+1 share of Svyazinvest. Comstar has a 69.93% stake in MGTS. Svyazinvest owns a 23.33% stake in MGTS and a 38% stake in Rostelecom (50.67% of the voting shares).

[1] 17.31% is owned by Comstar directly with another 7.69% owned by MGTS Finance S.A., which is controlled by Comstar.