Proposed Merger of MTS and Comstar Voluntary Tender Offer by MTS for up to 9% of Comstar Shares

The Boards of MTS and Comstar Have Recommended a Merger to Create the Largest Integrated Telecommunications Provider in Russia and the CIS

MOSCOW, June 25, 2010 - The Boards of Directors of Mobile TeleSystems OJSC ("MTS" -
NYSE: MBT), the leading telecommunications provider in Russia and the CIS,
and COMSTAR - United TeleSystems JSC ("Comstar" - LSE: CMST), a leading
supplier of integrated telecommunication solutions in Russia and the CIS,
announce that they have approved and recommend the merger of MTS and Comstar.
MTS currently owns 61.97% of Comstar (64.03% excluding treasury shares) and
consolidates Comstar in its financial results. As a result of the statutory
merger ("prisoedinenie" under Russian law), Comstar will be subsumed into MTS
and will cease to exist as a separate legal entity.

The Boards believe that the full consolidation of Comstar into
MTS is strategically important for both companies. A statutory merger is
intended to facilitate the full integration of MTS's and Comstar's subscriber
bases and enable the cross-selling and bundling of broadband and television
services to MTS's customers. As a result, the merger is expected to create
additional synergies and cost savings across the combined entity and
strengthen its competitive position. MTS is on track to exceed the USD 200
million of cost synergies indicated when it purchased majority control of
Comstar in October 2009.

According to the merger terms agreed between the MTS and
Comstar Boards, eligible Comstar shareholders will receive 0.825 MTS ordinary
shares for each Comstar ordinary share that they own (with one Comstar GDR
representing one ordinary share)(3). The exchange ratio represents a 7.7%
premium to the three month volume weighted average exchange ratio between MTS
ordinary shares and Comstar GDRs. The merger is conditional on the approval
of 75% of the shareholders present at each company's EGM, the receipt of
regulatory clearance and other closing conditions. MTS and Comstar expect to
convene EGMs on December 23, 2010, at which their respective shareholders
will vote on the merger. As required by Russian Joint Stock Companies Law,
MTS and Comstar shareholders who vote against or do not vote on the merger
will have the right to sell their shares back to MTS and Comstar,
respectively, for cash at a price set by the respective companies' Boards of
Directors, subject to the statutory limit of 10% of each company's Net Asset
Value under Russian Accounting Standards as determined at the most recent
reporting date preceding each company's EGM(4). Taking into account the
independent statutory appraisals carried out separately by Ernst & Young for
MTS and Comstar, the Board of Directors of MTS has set the repurchase price
at RUR 245.19 per MTS ordinary share, while the Comstar Board of Directors
has set its repurchase price at RUR 212.85 per Comstar ordinary share. MTS
and Comstar shareholders wishing to sell their shares back to the respective
companies will be able to sell their shares pro rata in the event of
over-subscription. The companies expect to complete the merger transaction in
the second quarter of 2011.

(1) Up to June 22, 2010.

(2) All US dollar amounts presented in this press release are
based on the RUR/USD exchange rate of RUR 30.7267 per USD 1 as of June 22,
2010.

(3) Holders of Comstar GDRs who do not wish or are not
permitted under their local law to receive MTS shares in connection with the
merger will receive the cash proceeds from the sale of the MTS shares to
which they would have been entitled net of applicable fees, expenses and
taxes, and subject to any adjustment for currency exchange rate fluctuations.

(4) For illustrative purposes only and based on the MTS and
Comstar RAS financial statements for the first quarter of 2010 and the
respective repurchase prices set by the two companies, MTS shareholders would
be able to sell back up to 2.4% of MTS's total shares outstanding, and
Comstar shareholders would be able to sell back up to 6.1% of Comstar's total
shares outstanding.

MTS will also launch a parallel voluntary tender offer (VTO)
for up to 37,614,678 Comstar shares, representing 9.0% of the issued share
capital of Comstar, at RUR 220.0 per Comstar ordinary share. The implied VTO
price per GDR is equivalent to USD 7.16, which represents a 13.1% premium to
the three month volume weighted average trading price of the Comstar GDR on
the London Stock Exchange. The VTO documentation has been submitted for
review to the FSFM and, following this review, the offer will be made by
delivery of the VTO documentation to the Comstar Board of Directors. The
Comstar Board will thereafter deliver the VTO documentation to Comstar
ordinary shareholders and to Comstar GDR holders via Deutsche Bank (the
depositary bank for Comstar's GDR facility). Comstar shareholders subscribing
to the VTO will receive a pro rata cash allocation in the event of
over-subscription to the VTO.

The combined merger and voluntary tender offer structure,
together with the statutory right of shareholders to sell their shares back
to MTS and Comstar, is intended to facilitate a cash and stock transaction,
whereby the companies can be combined after completion of the merger. In the
event of full election of the cash alternatives, through the VTO and the sale
of shares back to Comstar, the implied transaction value could be up to USD
1,030 million.

Mikhail Shamolin, President and Chief Executive Officer of
MTS, commented: "We believe that the merger of MTS and Comstar is attractive
for our shareholders because it will accelerate the delivery of our "3i"
strategic goal of realizing growth through increasing customer value, by
providing our customers with a broad, innovative and integrated offering of
mobile and fixed line telephony, high-speed internet access and pay-TV
services. The merger will enable the full integration of the Comstar and MTS
customer bases and the provision of bundled service offerings across Russia,
which we believe will further enhance our combined competitive position. In
particular, the merger is expected to streamline common business processes
and further optimize operating and capital expenditure. The structure of the
merger provides a mix of stock and cash alternatives for Comstar minority
shareholders, and also enables MTS to retain the financial resources and
flexibility to invest in the combined Group moving forward in key areas such
as broadband network development and 3G deployment."

Thomas Holtrop, Chairman of the Comstar Special Committee of
Independent Board Directors, commented: "The Special Committee of Independent
Board Directors has negotiated the terms of the transaction with MTS and
recommended that the Board of Comstar vote to approve the merger terms and
the transaction as a whole. We believe that the transaction presents Comstar
minority shareholders with attractive alternatives, as it will enable them to
participate in the future upside potential of the combined entity by
accepting shares in MTS or, alternatively, to receive cash by exercising
their statutory right to sell their shares back to the company. We look
forward to receiving and considering the voluntary tender offer in the coming
weeks."

Goldman Sachs International is acting as financial advisor to
MTS. J.P. Morgan plc provided a fairness opinion to the Comstar Special
Committee of Independent Board Directors. Latham & Watkins LLP is acting as
legal advisor to MTS, and Linklaters CIS is acting as legal advisor to
Comstar. Ernst & Young provided independent statutory appraisals to MTS and
the Comstar Special Committee of Independent Board Directors for the purposes
of each company's assessment of the prices to be paid in relation to the
statutory right of shareholders to sell their shares back to each respective
company.

MTS and Comstar will host a joint conference call today, which will start
at:

18:00 hrs (Moscow time)

15:00 hrs (London time)

10:00 hrs (US Eastern time)

To take part in the conference call, please dial one of the following
telephone numbers, quoting the MTS and Comstar call:

From Russia: +7-495-545-0587 PIN: 3444521#

From the US: +1-718-354-1152 PIN: 3444521#

From the UK: +44-203-140-8286 PIN: 3444521#

A replay of the conference call will be available from approximately
22:00 Moscow time / 19:00 London time / 14:00 US Eastern time today until
July 1, 2010:

From Russia: 810-800-2870-1012 PIN: 3444521#

From the US: +1-347-366-9565 PIN: 3444521#

From the UK: +44-207-111-1244 PIN: 3444521#

A slide presentation has also been posted at
www.mtsgsm.com/news/2010-06-25-28131/ and
www.comstar-uts.ru/common/img/uploaded/100625_Proposed Merger_Presentation.ppt

Important Information

This document is not for release, publication or distribution,
in whole or in part, in, into or from any jurisdiction where to do so would
constitute a violation of the relevant laws of that jurisdiction.

This document is for informational purposes and shall not
constitute an offer to purchase or a solicitation of an offer to purchase
with respect to any securities. Any such offer or solicitation will be made
only by means of the offer document delivered to Comstar in respect of the
VTO.

The final terms of the VTO will be contained in the offer
document delivered to Comstar. Investors and shareholders of Comstar are
strongly advised to read the offer document and related materials as soon as
they have been published, as these will contain important information.

The VTO will be made for the securities of Comstar, a company
incorporated under the laws of Russia and will be made in the United States
in compliance with Section 14(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Regulation 14E thereunder. The VTO will be
made in the United States by MTS and no one else. The VTO will be subject to
disclosure and procedure requirements of Russia which are different from
those of the United States.

MTS, certain affiliated companies and the nominees or brokers
(acting as agents) may make certain purchases of, or arrangements to
purchase, shares in Comstar outside the VTO during the period in which the
VTO remains open for acceptance. If such purchases or arrangements to
purchase are made they will be made outside the United States and will comply
with applicable law, including the Exchange Act.

This document is not an offer for sale of any securities in
the United States. Securities may not be offered or sold in the United States
absent registration or an exemption from registration under the U.S.
Securities Act of 1933, as amended (the "Securities Act"). MTS does not
intend to register securities or conduct a public offering in the United
States.

No action has been or will be taken in any jurisdiction that
would permit a public or registered offering to acquire MTS shares in
exchange for the shares of Comstar in connection with the Merger. Therefore,
only those Comstar shareholders (including holders of global depositary
receipts) who are resident in a jurisdiction which permits those shareholders
to participate in a non-public, or unregistered, private offering of
securities will be eligible to receive MTS shares in connection with the
merger. Holders of Comstar GDRs who are not eligible to receive MTS shares in
connection with the merger will receive the cash proceeds from the sale of
the MTS shares to which they would have been entitled net of applicable fees,
expenses and taxes and subject to any adjustment for currency exchange rate
fluctuations.

This communication is being distributed to and is directed
only at (i) persons who are outside the United Kingdom or (ii) persons who
have professional experience in matters relating to investments falling
within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the "Order") and (iii) high net worth
entities, and other persons to whom it may lawfully be communicated, falling
within Article 49 of the Order (all such persons together being referred to
as "relevant persons"). Any investment activity to which this communication
relates will only be available to and will only be engaged with, relevant
persons. Any person who is not a relevant person should not act or rely on
this document or any of its contents.

Persons who are resident in the United Kingdom should note
that the VTO, when made, will be to, and acceptance will be accepted from,
only those investors and shareholders in the United Kingdom who are (or who
are acting on behalf of), and who are able to establish to the satisfaction
of MTS that they are (or are acting on behalf of): "qualified investors"
within the meaning of section 86(7) of the Financial Services and Markets Act
2000, or (ii) persons to whom the VTO may otherwise be made or directed
without an approved prospectus having first been made available to the public
in the United Kingdom. United Kingdom investors and shareholders receiving
the VTO should consult with their legal advisers to determine whether they
are eligible as "qualified investors" or are otherwise able to receive and
accept the VTO.

The release, publication or distribution of this document and
any other applicable VTO- or merger-related documentation may be affected by
the laws or regulations of relevant jurisdictions. Therefore, any persons who
are subject to the laws and regulations of any jurisdiction should inform
themselves of and observe any applicable requirements.

J.P. Morgan plc ("J.P. Morgan") is acting for Comstar (as represented by
the Special Committee) in relation to the Transaction and for no one else and
J.P. Morgan shall not regard any other person (including, without limitation,
any person who is a director, officer, employee, shareholder or creditor of
Comstar) as its client in relation to the Transaction and shall not be
responsible to any other person for providing protections afforded to clients
of J.P. Morgan or advising any other person involved in the Transaction.

Some of the information in this press release may contain
projections or other forward-looking statements regarding future events or
the future financial performance of MTS and/or Comstar. You can identify
forward looking statements by terms such as "expect," "believe,"
"anticipate," "estimate," "intend," "will," "could," "may" or "might," and
the negative of such terms or other similar expressions. In addition,
statements regarding expected operational and cost synergies in respect of
the merger of MTS and Comstar are forward-looking statements. MTS and Comstar
wish to caution you that these statements are only predictions and that
actual events or results may differ materially. MTS and Comstar do not intend
to update these statements to reflect events and circumstances occurring
after the date hereof or to reflect the occurrence of unanticipated events.
MTS and Comstar refer you to the documents MTS files from time to time with
the U.S. Securities and Exchange Commission, specifically the MTS's most
recent Form 20-F. These documents contain and identify important factors,
including those contained in the section captioned "Risk Factors" that could
cause the actual results to differ materially from those contained in MTS's
and Comstar's projections or forward-looking statements, including, among
others, potential fluctuations in quarterly results, MTS's and Comstar's
competitive environment, dependence on new service development and tariff
structures, rapid technological and market change, acquisition strategy,
risks associated with telecommunications infrastructure, risks associated
with operating in Russia and the CIS, volatility of stock price, financial
risk management and future growth subject to risks.

Mobile TeleSystems OJSC ("MTS") is the leading telecommunications group
in Russia, Eastern Europe and Central Asia, offering mobile and fixed voice,
broadband, pay TV as well as content and entertainment services in one of the
world's fastest growing regions. Including its subsidiaries, the Group
services over 103.5 million mobile subscribers in Russia, Ukraine,
Uzbekistan, Turkmenistan, Armenia and Belarus, a region that boasts a total
population of more than 230 million. Since June 2000, MTS's Level 3 ADRs have
been listed on the New York Stock Exchange (ticker symbol MBT). Additional
information about the MTS Group can be found at www.mtsgsm.com.

Comstar-UTS ("Comstar") is the leading fixed-line
telecommunications company in Moscow. Comstar provides voice, data,
television and other value-added services to residential and corporate
subscribers and operators, using its extensive backbone network and exclusive
last mile access to 96% of Moscow households. The Company also offers
communications services in 82 cities in the Russian regions, Armenia and
Ukraine. Comstar had 3.6 million residential subscribers including 860
thousand residential broadband internet subscribers in Moscow, as well as 2.6
million regional and international residential subscribers, including 426
thousand residential broadband internet subscribers and 2.0 million
residential pay-TV subscribers at the end of the first quarter of 2010.
Comstar generated USD 407.0 million of revenues and an 43.9% OIBDA margin for
the three months ended March 31, 2010. Comstar's Global Depositary Receipts
are listed on the London Stock Exchange (ticker: CMST).

For more information, please visit www.mtsgsm.com and
www.comstar-uts.com or contact:

    Joshua B. Tulgan
    Director, Investor Relations
    Acting Director, Corporate Finance
    Department of Investor Relations
    Mobile TeleSystems OJSC
    Tel: +7-495-223-2025
    E-mail: ir@mts.ru

    Learn more about MTS. Visit the official blog of the Investor Relations
    Department at www.mtsgsm.com/blog/

    Comstar UTS
    Masha Eliseeva
    Tel: +7-985-997-0852
    ir@comstar-uts.ru

Joshua B. Tulgan, Director, Investor Relations, Acting Director, Corporate Finance, Department of Investor Relations, Mobile TeleSystems OJSC, Tel: +7-495-223-2025, E-mail: ir at mts.ru; Comstar UTS, Masha Eliseeva, Tel: +7-985-997-0852, ir at comstar-uts.ru