AT&T CFO John Stephens offered few details on the operator’s beleaguered merger with T-Mobile USA at an investor conference in New York today, saying only that the company was still working to salvage the deal.

“We continue to move forwards with our efforts to complete the T-Mobile transaction,” Stephens said during an address at the UBS Global Media and Communications Conference. “AT&T and Deutsche Telekom are motivated to complete the transaction and we continue to pursue the sale.”

When asked by an audience member what AT&T’s backup plan was in the event the massive transaction failed, Stephens declined to provide specifics, saying only that the company was working with Deutsche Telekom, T-Mobile’s parent company, to move the process forward.

AT&T recently withdrew its FCC application for the merger to focus on reaching a settlement with the Justice Department, which filed an antitrust suit to block the deal in August.

The rumor mill was buzzing last week with reports that AT&T would sell up to 40 percent of T-Mobile’s assets to Cricket parent Leap Wireless International. There were also conflicting reports that AT&T and Deutsche Telekom were considering forming a joint venture to skirt regulatory blocks to the deal.

If the merger falls through, AT&T will have to pay Deutsche Telekom $4 billion in cash and spectrum. AT&T plans to record the fee in its upcoming fourth-quarter earnings, a concession that the transaction may fail. Stephens downplayed the charge, calling it “simply an accounting matter… There’s a contractual obligation that if the charge is to become due, you have to record it.”

He said the fee would be less of a hit than it might seem on its face value because it was pre-tax. “You can do the math, but it’s a much smaller cash impact than the first impression may give you,” Stephens said.

The T-Mobile transaction loomed large over what Stephens described as an otherwise stellar quarter for AT&T. The company has been selling a record 100,000 smartphones per day and sold 6 million smartphones during October and November. With one month still to go in the fourth quarter, AT&T is set to break its previous record of 6.1 million smartphone sales in a single quarter, Stephens said.

Sales were buoyed by a “higher upgrades” from subscribers waiting for the new iPhone 4S. The company activated more than 1 million units of the popular smartphone during the first five days the iPhone 4S was available after its launch in mid-October.

Stephens conceded that subsidies for the iPhone and AT&T’s other smartphones were costly and would affect its fourth-quarter profits, but said that the expense was worth it over the long haul as customers spent more money on service plans. “It’s an investment we’re more than willing to make to grow our business,” he said.