Otelco Declares Distribution Payment to IDS Holders

ONEONTA, AL, May 13 /CNW/ - Otelco Inc. (NASDAQ: OTT; TSX: OTT.un), a wireline telecommunication services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire 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 June 30, 2010, to holders of record at the close of business on June 15, 2010. The distribution represents the twenty-second 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 March 30, 2010, through June 29, 2010, 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 2010 as they were in 2008 and 2009.

ABOUT OTELCO

Otelco Inc., headquartered in Oneonta, Alabama, provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire and West Virginia. The Company's services include local and long distance telephone, network access, transport, digital high-speed data lines 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 www.OtelcoInc.com.

For further information: Curtis Garner, Chief Financial Officer, Otelco Inc., [phone], [email protected]