Fixed-line service provider Otelco acquires Mid-Maine Communications for approximately $37.8M in cash

April 11, 2006

2 Min Read

ONEONTA, Alabama -- Otelco Inc. (AMEX: OTT; TSX: OTT.un), the sole wirelinetelephone services provider in several rural communities in Alabama and Missouri, today announced ithas signed a definitive agreement to acquire Mid-Maine Communications, Inc. for approximately $37.8million in cash.

“The acquisition of Mid-Maine is a strategically important opportunity for Otelco,” said Mike Weaver,President and Chief Executive Officer of Otelco. “Mid-Maine has similar roots to Otelco as a ruralwireline telephone provider and has expanded into the larger cities in Maine. Their operations willcomplement our existing operations in Alabama and Missouri. More importantly, Mid-Maine hasdemonstrated strong financial performance and operational results, and their management team willcontinue to lead operations after the transaction closes. We also believe expansion opportunities exist inthe New England area and that the Mid-Maine acquisition can be the catalyst for growth in this part of thecountry. We are very excited about this transaction and its impact on our overall performance in thefuture.”

Mid-Maine, located in Bangor, Maine, is a privately owned company that has providedtelecommunications solutions to residential and business customers since 1994. Mid-Maine offers acomplete set of voice, data and Internet services through both a regulated and non-regulated subsidiary.For the year ended December 31, 2005, Mid-Maine generated approximately $22.1 million in totalrevenue. This acquisition will increase Otelco’s total access lines from 32,500 to over 51,000.

Mid-Maine has invested extensively in its network, spending approximately $18 million over the past fiveyears. In addition to operating its own tandem switch, Mid-Maine’s network encompasses 188.5 miles offiber and four OC48 systems, as well as a state of the art network operations center.

Otelco plans to finance the acquisition through additional bank borrowings. In connection with thetransaction, Otelco intends to refinance its existing senior secured credit facility and increase its size to$135 million. It is also anticipated that as part of the refinancing, the interest rate terms of the creditfacility will be lowered. GE's Global Media & Communications group will act as lead arranger for thefinancing.

Otelco Inc.

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