The Telnet server does not return an expected number of replies when it receives a long sequence of 'Are You There' commands. This probably means it overflows one of its internal buffers and crashes. It is likely an attacker could abuse this bug to gain control over the remote host's superuser. For more information, see: http://www.team-teso.net/advisories/teso-advisory-011.tar.gz
Comment out the 'telnet' line in /etc/inetd.conf.