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AT&T said to consider stopping all Samsung Note 7 sales

Scott Moritz and Alex Webb
Bloomberg

AT&T Inc. is considering stopping all sales of Samsung Electronics Co.’s flagship Galaxy Note 7 over concerns about the smartphone’s safety, according to a person familiar with the situation.

A final decision will likely come as soon as Friday, said the person, who asked not to be identified because the deliberations are private. AT&T spokesman Fletcher Cook declined to comment.

Like many competitors, the second-largest U.S. wireless carrier is already offering alternative smartphones to people who return Note 7 devices.

Samsung started replacing the Note 7 last month because of a flaw in its lithium battery that can lead to overheating and pose a burn hazard to customers. Airlines have banned customers from using the smartphones on flights, and the evacuation of a Southwest Airlines Co. plane earlier this week was blamed on smoke caused by a replacement device.

AT&T’s move would be a further blow to Samsung. The wireless carrier is the third-biggest customer of the South Korean company, according to estimates compiled by Bloomberg. Samsung is already facing a bill that analysts estimate stretches into billions of dollars for the recall of 2.5 million Note 7 phones that it announced last month.

Samsung said in a statement posted on its website that it understands the concern of the carriers and consumers over the newly released replacement Note 7 devices andthe company will share findings as soon as possible.

Samsung was able to rely on sales to other phone makers and computer manufacturers to offset the fallout from the Note 7 crisis in the three months through September, when operating profit exceeded analyst estimates. The stock has recovered since losing $22 billion of market value after the recall was announced on Sept. 1 and hasn’t significantly underperformed its Nasdaq technology peers in that period.

The imbroglio coincides with mounting pressure from investor Paul Elliott Singer, who this week advocated a break-up of the complex Samsung empire.

(Adds Samsung comment in sixth paragraph.)

—With assistance from Ian King To contact the reporters on this story: Scott Moritz in New York at smoritz6@bloomberg.net, Alex Webb in San Francisco at awebb25@bloomberg.net. To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Stanley James, John McCluskey

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