Mr. Curtis Garner reports

OTELCO DECLARES DISTRIBUTION PAYMENT TO IDS HOLDERS

Otelco Inc.'s board of directors has declared a distribution of 42 cents per income deposit security, which will be made on March 30, 2012, to holders of record at the close of business on March 15, 2012. The distribution represents the 29th consecutive quarterly distribution since the company completed its initial public offering in December, 2004.

Each IDS comprises one share of common stock paying dividends at the direction of the board of directors and $7.50 principal amount of 13-per-cent senior subordinated notes due 2019 with interest paid quarterly. The senior subordinated notes are callable at a premium of 6.5 per cent plus accrued interest during 2012, with the premium declining by 1.3 per cent per year through 2016.

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 Dec. 30, 2011, through March 29, 2012, of 24.375 cents per note. Currently, it is anticipated that a portion of the company's dividends will be qualified dividends, and the balance will be treated as a return of capital for shareholder tax purposes in 2012.