AT&T Inc. stopped all sales of Samsung Electronics Co.’s flagship Galaxy Note 7 over concerns about the smartphone’s safety.
“Based on recent reports, we’re no longer exchanging new Note 7s at this time, pending further investigation of these reported incidents,” AT&T spokesman Fletcher Cook said in an e-mailed statement on Sunday. “We still encourage customers with a recalled Note 7 to visit an AT&T location to exchange that device for another Samsung smartphone or other smartphone of their choice.”
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 last week was blamed on smoke caused by a replacement device.
Like many competitors, the second-largest U.S. wireless carrier had been already offering alternative smartphones to people who return Note 7 devices. On Friday, Bloomberg News reported that AT&T was considering halting sales of the Note 7.
AT&T’s move is 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 and the 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.
With assistance from Ian King.