There are instructions for this
on the wiki that work - I've used them on several firmware versions, including 3.19.
Most everything related to patching/customization can be accomplished without Telnet, but if you really do need it, it's an option.
Those instructions will lead you through obtaining copies of system files, modifying them to enable Telnet/FTP, and then updating your device.
Files modified are as follows: etc/init.d/rcS, etc/inittab, etc/inetd.conf
Be very cautious when editing system files. It is possible that you can brick your device. You'll want to use a text editor that understands Unix line breaks. (e.x. not wordpad/notepad in Windows).
I've uploaded edited files for the Kobo Aura H2O. While I believe they will work on other devices, I don't have any to test with. Others may be able to confirm.
Use at your own risk.
If you want to use them, download the
copies here. Unzip "telnet_on.zip" and copy the KoboRoot.tgz file to the .kobo folder on your device.
Next, launch the web browser to ensure WiFi connection stays active, and telnet in using the ip address assigned by your router. Username is root. No password.
I'd suggest setting a root password for security or disabling telnet when you are done, by loading the KoboRoot.tgz from the "telnet_off.zip" file.