A spokesperson for Optus said the carrier's coastal fibre-optic link was cut during maintenance work being carried out on railway lines at Waterfall, south of Sydney.
Earlier today, Optus corporate support technicians described the break as a "major network issue" and were unable to give customers an estimated time for full restoration of service.
The Optus spokesperson said technicians managed to repair the line in around an hour but that some disruption would have occurred while technicians re-routed traffic to the carrier's inland fibre link.
According to Optus, the outage affected both its main customer groups, with the most impact being felt by its business customers.
Optus was late today reluctant to reveal any more details surrounding the accident, preferring to wait until technicians were able to tender a full report on the incident.