Otelco Declares Distribution Payment to IDS Holders



    ONEONTA, Alabama, Aug. 14 /CNW/ - Otelco Inc. (NASDAQ:   OTT; TSX: OTT.un),
the sole wireline telephone services provider in rural communities in Alabama,
Maine and Missouri, today announced that its Board of Directors has declared a
distribution of $0.42 per Income Deposit Security (each an "IDS"), which will
be made on September 30, 2008 to holders of record at the close of business on
September 15, 2008. The distribution represents the fifteenth consecutive
quarterly distribution since the company completed its initial public offering
in December 2004.
    Each IDS is comprised of one share of Class A Common Stock and $7.50
principal amount of 13% senior subordinated notes due 2019.
    The distribution consists of a dividend of $0.17625 per share of Class A
common stock and an interest payment on the senior subordinated notes for the
period from June 30, 2008 through September 29, 2008 of $0.24375 per note.
Currently, it is anticipated that the Company's dividends will continue to be
treated as a return of capital for tax purposes.

    ABOUT OTELCO

    Otelco Inc., headquartered in Oneonta, Alabama, provides wireline
telephone services in Alabama, Maine and Missouri. The Company's services
include local and long distance telephone, network access, transport, digital
high-speed and dial-up Internet access, cable television and other telephone
related services. With over 69,000 voice and data access lines, which are
collectively referred to as access line equivalents, Otelco is among the top
40 largest local exchange carriers in the United States based on number of
access line. Otelco operates six incumbent telephone companies serving rural
markets, or rural local exchange carriers, each of which can trace its history
as a local telecommunications provider as far back as the early 1900s. It also
provides competitive telephone services through several subsidiaries. For more
information, visit the Company's web site at www.OtelcoInc.com.




For further information:

For further information: Curtis Garner, Chief Financial Officer, Otelco
Inc., (205) 625-3571, Curtis@otelcotel.com

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Otelco Inc.

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