One issue with telnet is that there's no protection of the data in any sense. Anyone on the path can copy the data, alter it, and nobody will know. Any data coming from it is untrusted.
The rest of the network being compromised is not the main risk, because this is inherent to any service you have: HTTPS, SSH, NTP, anything. If someone can connect to your service, a bug on said service may lead to compromise. The word may is key here. Some services are stable, secure, and run for years without issues, while others (sendmail, I am looking at you) have a constant stream of issues.
Apart from an SQL injection attack are there any major concerns I should be worried about regarding the rest of my network being compromised.
Here there's a lot of things that may go wrong:
Buffer overflows: this depends on how your application manages the incoming data. A buffer overflow, use-after-free, off-by-one and a lot of other memory access issues can lead to code execution and lateral movement on your network. The same applies to any other service.
Data leakage: anybody sending data to your service is subject to have their data stolen.
Corruption of data: any message can be silently changed in transit.
Replay attacks: data can be copied, and re-sent later.
What do you do? You can ask your clients to run an encrypted tunnel between their network and yours, and send the telnet data inside the tunnel. Because asking the clients to upgrade their services is not something they will do. SSH is around since 1995, HTTPS since 1996, and they still use telnet, so I bet they will keep using telnet until the end of the times.
cyber security audit by an external company said it was a massive risk to our business.
Ask them to clarify the massive risk. Most of the time, the massive risk they are talking about is credential theft, as telnet is not encrypted and any credential sent can be stolen. If you tell them that no credential is ever sent, maybe they change the risk assessment.
But even so, create an encrypted tunnel and FORCE your clients to use the tunnel.