ONEONTA, Ala.–(EMWNews)–Otelco Inc. (NASDAQ: OTT)(TSX: OTT.un), the sole wireline telephone

services provider in several rural communities in Alabama, Maine and

Missouri, today announced results for its second quarter ended June 30,

2008. Key quarterly highlights for Otelco include:

• Total revenues of $17.7 million.

• Operating income of $5.0 million.

• Adjusted EBITDA (as defined below) of $8.5 million.

“Our business provided solid revenue and

subscriber growth which resulted in a strong financial performance for

second quarter,” stated Mike Weaver, President

and Chief Executive Officer of Otelco. “Key

operating highlights include continued growth in access line equivalents

when compared to last quarter and last year, driven by increases in both

RLEC data lines and CLEC voice and data lines. Our bundled product

offerings have increased to approximately 40% of our eligible customers.

“We also delivered solid increases in revenue

and operating income, which increased 3.2% and 14.1%, respectively, from

the year-ago period and 3.6% and 10.8% respectively for the first half

of 2008 compared to the same period in 2007. Adjusted EBITDA was $8.5

million for the quarter and $17.3 million year-to-date, a 1.6% and 1.7%

increase from the comparable periods last year,”

added Weaver. “Bottom line performance also

improved from the year-ago period as we reported net income of $0.4

million for the quarter and $0.8 million year-to-date compared to a net

loss of $0.1 million for the second quarter 2007 and a net loss of $0.2

million for the first half of 2007. We invested over $1.5 million in our

infrastructure to serve both our current and future customers and

delivered our fourteenth consecutive IDS distribution. That demonstrates

our continued focus on generating solid operating and financial

performance while also exploring strategic expansion opportunities to

further grow our business.”

Distribution to IDS Holders

Each quarter, the Board considers the declaration of dividends during

its normally scheduled meeting. For the second quarter of 2008, the

Board is meeting on August 14, 2008. Currently, it is anticipated that

the Company’s dividends will continue to be

treated as a return of capital for tax purposes. The scheduled interest

and any dividend declared will be paid on September 30, 2008 to holders

of record as of the close of business on September 15, 2008. The

interest payment will cover the period from June 30, 2008 through

September 29, 2008.