IPSWICH, Mass. - AT&T Inc. has dropped its legal fight against a Massachusetts businessman whose company was on the hook for a fraudulent million-dollar phone bill.

The telecommunications company says in a statement Monday that it is no longer pursuing its claims against Michael Smith, of Ipswich, "though we are entitled by law to collect the amounts owed."

Smith says someone hacked into his small manufacturing company's phone system in 2009 and made nearly $900,000 in calls to Somalia. AT&T sued Smith for $1.15 million to recover the cost of the calls plus interest.

Smith tells The Salem News he repeatedly asked AT&T to write off the bill. He said if forced to pay it, his company would close and his 14 employees would lose their jobs.

The Associated Press left a message for Smith on Monday.