Telstra is headed to Federal Court after its ads on the back of payphones were dubbed a “cash grab”.

The telco is battling several local governments over the payphone booths, which feature 75-inch digital screens run by outdoor advertising giant JCDecaux on the back.

Certain loopholes allow Telstra to install “low impact” equipment on payphones without planning approval. The company argues its upgrades fit this rule.

The City of Melbourne has taken the telco and the ad firm to a Victorian tribunal, while the City of Sydney is considering getting the competition watchdog involved, given Telstra has a monopoly over payphones.

Telstra group general counsel Carmel Mulhern said taking the matter to the Federal Court would provide a single judgement that applies across Australia.

“This will avoid the time and cost of court action in other states, and should mean a quicker, consistent outcome,” she said in a statement.

City of Sydney Liberal councillor Craig Chung asked the city’s Lord Mayor Clover Moore to raise the potential anti-competitive issues with the federal government earlier this year.

“It really is just a cash grab,” Cr Chung told reporters.

Telstra claims upgrading its booths is critical for future telecommunications infrastructure, because they could one day offer Wi-Fi internet connections, charge phones and host 5G antenna boxes.