Otelco Declares Distribution Payment to IDS Holders

    ONEONTA, AL, Aug. 14 /CNW/ - Otelco Inc. (NASDAQ:   OTT; TSX: OTT.un), a
wireline telecommunication services provider in Alabama, Maine, Massachusetts,
Missouri and West Virginia, 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, 2009 to holders of record at the close of
business on September 15, 2009. The distribution represents the nineteenth
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, 2009 through September 29, 2009 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 shareholder tax purposes in 2009 as they
were in 2008.


    Otelco Inc., headquartered in Oneonta, Alabama, provides wireline
telecommunications services in Alabama, Maine, Massachusetts, Missouri and
West Virginia. 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 more than
100,000 voice and data access lines which are collectively referred to as
access line equivalents, Otelco is among the top 25 largest local exchange
carriers in the United States based on number of access lines. Otelco operates
ten 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 retail and wholesale communications services through several
subsidiaries. For more information, visit the Company's web site at

For further information:

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

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