If Telstra wins the company will get between $100 million and $200 million more than what NBN Co expects to pay over a 10-year period.

It is understood the problem was caused by the lack of a specific year in the contract despite legal teams working on the deal for over two years.

Arguments heard by judge

The problem was discovered after the deal was signed and both sides attempted to plan the timing of the payments. Both sides have already had arguments heard by former Federal Court judge Kevin Lindgren in 2012.

Mr Lindgren found in favour of NBN Co in December 2012 and provided an 11-page explanation as part of the judgement. “I have come to the conclusion that NBN Co is correct," he said. “Telstra’s arguments are akin to the tail wagging the dog."

Telstra has chosen not to accept Mr Lindgren’s judgement and will contest the issue in the NSW Supreme Court. A preliminary hearing is due to begin on November 8 in Sydney.

Telstra spokeswoman Nicole ­McKechnie said the legal proceedings and their impact would be significant but not material from a investor ­perspective. “We have commenced legal proceedings with NBN Co over when CPI adjustments should start to apply under the NBN Definitive Agreements," she said. “We have one take on the contract and NBN Co has another." The case has the potential to cause problems for both companies as they enter fresh negotiations over the $11.2 billion contract.

Timing of lawsuit

Where Labor’s $37.4 billion NBN would have replaced Telstra’s ­copper network, the new Coalition ­government prefers a fibre-to-the-node approach that will use the copper connections. The Coalition government will now have to buy and use Telstra’s copper network, once valued at up to $17 billion, to build its fibre-to-the-node system which is expected to be cheaper and slower than Labor’s version.

Ms McKechnie said that resolving the issue before negotiations began would “help provide greater certainty and as such may assist future policy ­discussions." She also insisted the re­negotiations of the contract had nothing to do with the timing of the lawsuit.

Telstra’s lead NBN negotiator Tony Warren last week told investors in ­Sydney that any negotiation would need to add value to the telco’s existing deal. But he also said that positive statements by Communications Minister Malcolm Turnbull had helped assure the company a renegotiation could be successful for both sides.