The full bench of the Federal Court had reduced Optus's fine for misleading advertising to $A3.61 million.
The court found Optus guilty of breaching the Trade Practices Act for a series of print, online and billboard advertisements in July 2011, and handed down a $5.26 million penalty.
However, Optus appealed the judgment on four grounds, including the claim the presiding judge in the case, Justice Nye Perram, erred in his judgment of key facts.
Chief Justice Patrick Keane, Justice Paul Finn and Justice John Gilmour said the presiding judge's ruling that Optus had failed to take compliance seriously was not supported by the evidence at trial.
As such, the original fine had to be set aside, the justices said in their written judgment.
In setting a new penalty, the three justices said, they did not
take quite as severe a view of Optus's online contraventions as the
primary judge.
However, they said Optus's conduct was very serious and the contraventions were on a grand scale. They also were unexplained.
"Optus has given the court no reason to be confident that, in the absence of a very substantial penalty, it will not regard as acceptable the risk of a fine for contravention," the judgment said.
"The court must fashion a penalty which makes it clear to Optus, and to the market, that the cost of courting a risk of contravention of the Act cannot be regarded an as acceptable cost of doing business."
The Australian Competition and Consumer Commission (ACCC) sued Optus over advertisements for the "Think Bigger" and "Supersonic" broadband internet plans that it claimed misled people about the download allowance they could get under the plans.
The original $5.26 million fine for the 11 advertisements was the largest civil penalty handed down for a consumer protection matter, the ACCC said at the time.
Optus is a wholly-owned unit of Singapore Telecommunications (SingTel) which is listed in both Australia and Singapore.
At 1106 AEDT, SingTel was down two cents at $2.31 in local trade on a day the broader market was up 0.3 per cent.
