The $56 billion telco giant, which powers about 25 million Australian mobile services, confirmed on Wednesday it was investigating how thousands of people were unable to make calls and access data on their phones.
The outage brought freight and regional train networks to a halt, hampered payment systems crucial to small businesses and even shut down a small number of electric vehicle charging plugs.
The prime minister said there was no evidence to suggest any malicious activity was behind the technical failure.
"This is deeply concerning and very disruptive to people's lives," he told reporters in Brisbane.
Earlier, Telstra chief financial officer Michael Ackland expressed regret for the outage, describing it as intermittent but widespread.
"At this stage, we do not know what the root cause was - I'd rather let the investigations play out," he said.
Time synchronisation mechanisms across several nodes on Australia's east coast were not working properly about 4.30am, sparking the outage.
The telco giant said it made "good progress" restoring services with about 90 per cent of calls and data flowing successfully by mid-morning.
"We know how much our customers rely on our network and understand just how much of a disruption this is to your day," the company said in a statement.
"We're so sorry. We'll share further updates until all is resolved."
Mr Ackland assured the public triple-zero calls followed different settings and were not impacted in the same way as other mobile calls.
The company had conducted a number of welfare checks, he added.
Opposition Leader Angus Taylor drew a link between the outage and a recent Chinese missile test, although he did not provide any evidence to support the suggestion.
"We saw a provocative and unwelcome missile launch from the (People's Liberation Army) yesterday and I can understand why Australians are drawing that connection," he told reporters.
"Now, I don't know whether there's any connection or not, I have no idea."
The outage affected triple-zero calls in WA, according to the state's police force, which advised residents to contact family or neighbours with a working phone in the case of any emergency incidents.
The service disruption forced the Australian Rail Track Corporation to suspend freight services along its rail lines nationally as a safety precaution.
The outage also brought all of Victoria's regional train services to a halt, leaving thousands of passengers stranded in the morning midweek rush.
Across the border, Transport for NSW said some regional train services in the Hunter region and southwest of Sydney were not running.
Eftpos machine company Tyro also reported hampered transactions.
Chargefox, which operates more than 2200 electric vehicle charging plugs, said a small number of chargers remained offline.
Mr Ackland insisted customers should still trust the nation's largest network provider.
"We take these outages very, very seriously ... but it is a big and complex network," he said.
Telstra asked users to restart their devices as a temporary fix.
At its peak, more than 7000 customers reported the network disturbance on online monitoring platform Downdetector.
The latest outage comes after other telecommunications giants Vodafone and Optus previously experienced major network disruptions.
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