Country Road Enters into Stock Purchase Agreement with Otelco

August 7, 2008 – Country Road Communications LLC has entered into a Stock Purchase Agreement (the “Agreement”) with Otelco Inc. OTT (TSX:OTT.un). Country Road is a leading provider of advanced telecommunications services to communities located in Maine, Massachusetts and West Virginia. Pursuant to the Agreement, Otelco will acquire 100% of the outstanding capital stock of Pine Tree Holdings, Inc., Granby Holdings, Inc. and War Holdings, Inc. from Country Road. The consideration for the purchase is $101,329,000, payable in cash at closing, subject to adjustments as provided in the Agreement. The acquisition of the Country Road subsidiaries will add more than 23,000 Rural Local Exchange Carrier (RLEC) voice and data access lines; 6,000 retail Competitive Local Exchange Carrier (CLEC) voice and data access lines; and 82,000 wholesale CLEC connections.

“Country Road is a great complement to our existing rural telephone and CLEC operations in Maine and is an important step in our expansion in the New England region,” said Mike Weaver, President and CEO of Otelco. “Country Road’s commitment to providing excellent customer service and delivering high quality telecommunications and Internet services to residential and business customers is consistent with Otelco’s commitment to its customers.

“From a strategic perspective, the acquisition of Country Road adds attractive markets in New England and strengthens our existing operations in the region. In addition, it reaffirms to investors that we continue to pursue a disciplined acquisition strategy, focusing on cash accretive opportunities. The completion of this transaction will increase our free cash flow and improve our payout ratio which will enhance our ability to maintain our dividend while also creating additional excess cash flow to support our growth,” added Weaver. “Country Road’s operations, which consist of four RLECs and one CLEC, are similar to Otelco’s existing operations in Maine and represent a well balanced business mix, with the revenue stability provided by the RLECs and the attractive growth opportunities provided by the CLEC,” noted Weaver.

“Finally, the combination of Country Road’s infrastructure with the extensive fiber network of our current Maine operation creates a more diverse and robust network platform for our existing customers and provides additional opportunities for expanding our services to new markets and increasing our penetration in the markets we currently serve,” Weaver commented.

Country Road Business Overview:

Country Road provides telecommunications services through the following subsidiaries:

• The operations of Pine Tree Telephone and Saco River Telephone together form Country Road’s Maine RLEC cluster. Pine Tree’s franchise area is comprised of approximately 120 square miles located 25 miles from Portland, serving six towns from three exchanges in Gray, West Gray and New Gloucester. Saco River’s franchise area is comprised of approximately 110 square miles located approximately 17 miles from Portland, serving seven towns from three exchanges in Bar Mills, Waterboro and West Buxton.
• CRC Communications of Maine, operating under the Pine Tree Networks brand, is a CLEC and provides integrated communications services directly to small and medium enterprises and, on a wholesale basis, to other multi-system operators in Maine.
• Country Road’s Granby Holdings subsidiary operates as an RLEC and is located approximately 12 miles from Springfield, Massachusetts, serving the town of Granby (approximately 28 square miles) from one exchange.
• Country Road’s War Telephone Company subsidiary operates as an RLEC and is approximately 25 miles from Bluefield, West Virginia, serving the town of War from one exchange.

Consummation of the proposed transaction is subject to customary closing conditions, regulatory approvals and funding of the senior debt commitment. The transaction has been approved by the Boards of Directors of both companies and is expected to close in the fourth quarter of 2008.