Mr. Curtis Garner reports

OTELCO DECLARES DISTRIBUTION PAYMENT TO IDS HOLDERS

Otelco Inc. has declared a distribution of 42 cents per income deposit security, which will be made on Sept. 30, 2011, to holders of record at the close of business on Sept. 15, 2011. The distribution represents the 27th consecutive quarterly distribution since the company completed its initial public offering in December, 2004.

Each IDS comprises one share of common stock and $7.50 principal amount of 13-per-cent senior subordinated notes due 2019.

The distribution consists of a dividend of 17.625 cents per share of common stock and an interest payment on the senior subordinated notes for the period from June 30, 2011, through Sept. 29, 2011, of 24.375 cents 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 2011 as they were in 2008, 2009 and 2010.