Otelco Declares Distribution Payment to IDS Holders

    ONEONTA, AL, Aug. 16 /CNW/ - Otelco Inc. (AMEX:   OTT; TSX: OTT.un), the
sole wireline telephone services provider in several 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 October 1, 2007 to holders of record at the close of
business on September 14, 2007.
    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, 2007 through September 29, 2007 of $0.24375 per note.

    Otelco Inc., headquartered in Oneonta, Alabama, provides wireline
telephone services in portions of Alabama, Maine and Missouri. The Company's
services include local and long distance telephone, network access, transport
services, digital high-speed and dial-up Internet access, cable television and
other telephone related services. With more than 66,300 access lines, cable
modems and digital subscriber 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.otelco.net.

For further information:

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

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