Customers have also been encouraged to use WiFi whenever possible if they need internet access before the problems have been fixed.
The spokesperson added: "Voice calls are working OK".
"One of our third party suppliers has identified a global software issue in their system which has impacted us", it said.
(DPA/PA Images/Getty)Why is O2 not working? Work is now ongoing to fix the fault and customers are being encouraged to use wi-fi where possible.
United Kingdom customers have reported not being able to use mobile data to access the internet and other services on the company's network.More news: North Korea, United States: Leaders to Meet Early Next Year, Trump Says
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"We apologise for any inconvenience", the firm said, after problems were first reported at around 5.30am.
The issue is also impacting customers of MVNOs that piggyback on O2's infrastructure, like GiffGaff, Tesco Mobile, and Lyca Mobile. GiffGaff has confirmed its service is also offline.
In total, around 32 million customers are affected. Transport for London said: "The company that updates the data to our network of Countdown Systems is now experiencing difficulties in providing this service".
Affected phones, which may be every single O2 device, simply fail to show any kind of data connection and will not connect even when turned off and back on or when other workarounds are tried, according to users experiencing the problems. "This issue is being investigated".
O2 says it is trying to resolve the issue as fast as possible.