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Russia's competition authority Thursday approved mobile operator OAO Mobile TeleSystems' (MBT) application to buy its fixed-line affiliate OAO Comstar United TeleSystems (CMST.RS).

"We have approved MTS's application without any conditions," said Konstantin Senichkin, head of the transport and communications department at the Federal Antimonopoly Service.

MTS, which has 66 million subscribers in Russia, last month applied for permission to buy Comstar, which owns the fixed-line telephone network in Moscow.

The deal would bring together the telecommunications units of conglomerate OAO AFK Sistema (AFKS.RS), and MTS hopes that by incorporating a fixed-line business it will be able to take advantage of the rapidly growing demand for broadband Internet access in regional Russian cities.

Sistema owns 51% of Comstar and 53% of MTS.

MTS now has permission to buy all of Comstar's shares, but MTS's Chief Executive Mikhail Shamolin has said that it may not buy 100% of the fixed-line operator.

In order to avoid a conflict of interest for Sistema, MTS has set up a special committee of three independent directors to oversee the transaction.

Company Web site: www.fas.gov.ru

-By Will Bland, Dow Jones Newswires; +7 495 937 8445; william.bland@dowjones.com