Several hundred metres of cable between Manorcunningham and Newtowncunningham were stolen overnight.
Eircom says it is aware of the incident and engineers are working to restore services.
Gardai say they are investigating the theft.
Inishowen Sinn Féin Councillor Jack Murray has called for Donegal scrap dealers to look out for anyone who could be selling stolen cable lines.
Commenting on the situation, Councillor Murray said: “The theft of phone line cables is not a victimless crime. Many elderly people in south Inishowen who do not have mobile phones are now unable to contact, family members, doctors and other emergency services.
“This will cause hardship to many vulnerable people in the local community.
“I would call on scrap dealers, who deal in copper, to look out for anyone who could be selling stolen phone lines.
“Those people who are stealing these phone lines are making profit from it somewhere and I would ask anyone with any information to come forward immediately.”
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