Otelco Declares Distribution Payment to IDS Holders.

ONEONTA, Ala. -- Otelco Inc. (AMEX: OTT)(TSE: OTT.un), the sole wireline telephone services provider in several rural communities in Alabama 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 December 30, 2005 to holders of record at the close of business on December 15, 2005.

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 90 days from September 30, 2005 through December 29, 2005 of $0.24375 per note.

ABOUT OTELCO

Otelco Inc., headquartered in Oneonta, Alabama, is the sole wireline telephone services provider in several rural communities in Alabama and Missouri. The Company's services include local telephone, network access, long distance, digital high-speed and dial-up Internet access, cable television and other telephone related services. With more than 38,000 access lines, cable modems and digital subscriber lines, which are collectively referred to as total access line equivalents, Otelco is among the top 50 largest local exchange carriers in the United States based on number of access line equivalents. Otelco operates five 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. For more information, visit the Company's web site at www.otelco.net.