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Moody's withdraws ratings of OJSC Comstar United Telesystems

April 4, 2011 Moody's Investors Service
Moscow, April 01, 2011 -- Moody's Investors Service has today withdrawn the
Ba3 corporate family rating (CFR) of OJSC Comstar United Telesystems
(Comstar) following the company's reorganisation and incorporation into OJSC
Mobile Telesystems ("MTS", Ba2 on review for possible downgrade).

RATINGS RATIONALE

Following the purchase by MTS of the controlling stake in Comstar from their
mutual parent Sistema JSFC (Ba3, stable) in October 2009, MTS and Comstar
announced on 25 June 2010 the intention to merge the two entities, approved
by their respective boards of directors. The 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. This is expected to create additional synergies and cost
savings as well as strengthen the competitive position of the company.

On 10 March 2011, MTS announced that it had completed the share buyback
related to the statutory merger of Comstar into MTS.

On 25 March 2011, the UK Listing Authority cancelled the listing of
Comstar's global depository receipts (GDRs) from the Official List on London
Stock Exchange.

The statutory merger will be completed on 1 April 2011, when Comstar will be
subsumed into MTS and will cease to exist as a separate legal entity.

The following ratings have been withdrawn:

- CFR: Ba3

Please refer to Moody's Investors Service's Withdrawal Policy, which can be
found on its website, www.moodys.com.

LAST RATING ACTION & PRINCIPAL METHODOLOGIES

Moody's last rating action on Comstar was implemented on 14 October 2009,
when the rating agency confirmed the company's Ba3 CFR with a stable
outlook. This followed the completion of the sale of a 50.91% stake in
Comstar to MTS by the companies' parent, Sistema JSFC.

The principal methodologies used in rating Comstar was Moody's "Global
Telecommunications Industry Rating Methodology", published in December 2010
and available on www.moodys.com.



Open Joint Stock Company Comstar - United TeleSystems is one of the largest
providers of fixed-line communications to operators, corporate and
residential customers in the Moscow metropolitan area and other regions of
Russia, Ukraine and Armenia. Comstar reported revenues of
USD1.49 billion and operating income before depreciation & amortisation
(OIBDA) of USD593 million in 2009, and revenues of USD1229 million and OIBDA
of USD514 million in the first nine months of 2010.


Company — Comstar UTS
  • Full name
    Comstar United TeleSystems
  • Registration country
    Russia
  • Industry
    Communication