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The threat of new wireless competition has not gone anywhere, but Canada’s looming recession has investors looking shelter in consistent earnings, strong balance sheets and high dividends.

With the highest wireless market share in western Canada, Telus Corp. (NYSE:TU) provides those defensive characteristics, according to UBS analyst Jeffrey Fan. He removed his short-term “sell” rating on the stock given the recent share price weakness and focus on macro-economic issues. It was based on expectations for negative news flow related to increased wireless competition.

Mr. Fan said Telus’ current payout suggests it is in a position to modestly increase its dividend in November.

He upgraded his rating from “neutral” to “buy” and reiterated his C$41 price target.

UBS Canada expects the economy to be in recession after GDP declines in the fourth quarter of 2008 and the first quarter of 2009. It recently cut its annual growth outlook for next year from 1.8% to 0.4%.

Source: UBS Analyst Upgrades Telus Corp. Rating