Microsoft Teams Phone System: Admin Setup Guide

Microsoft Teams Phone (formerly Teams Phone System) is Microsoft’s cloud-based Private Branch Exchange (PBX) that replaces traditional phone infrastructure with calling capabilities built directly into Teams. For IT administrators, deploying Teams Phone means configuring calling plans or direct routing, assigning licenses, and managing dial plans — all from the Teams admin center. This guide covers the key steps and decisions for a Teams Phone deployment.

Teams Phone integrates directly with Microsoft Entra ID for authentication and Exchange Online for voicemail. For the official Teams Phone documentation, see the Microsoft Teams Phone deployment guide.

Teams Phone: Two Deployment Models

Microsoft Calling Plans

Microsoft Calling Plans provide PSTN (Public Switched Telephone Network) connectivity entirely through Microsoft. You purchase domestic or international calling minutes from Microsoft, assign phone numbers to users, and the entire telephony stack runs in the cloud. This model suits organizations that want a fully managed solution with no on-premises infrastructure. Calling Plans are available in specific countries — verify availability in your region before choosing this model.

Direct Routing

Direct Routing connects Teams Phone to your existing PSTN carrier via a certified Session Border Controller (SBC). This model gives you carrier flexibility, supports complex dial plans, and is often more cost-effective for large organizations or those in countries where Calling Plans are unavailable. Direct Routing requires more configuration but integrates with existing telephony investments.

Teams Phone Licensing

Specifically, Teams Phone requires a Teams Phone license (included in Microsoft 365 E5 or available as an add-on for E3/Business users). Each user also needs either a Calling Plan add-on or an SBC configured for Direct Routing to actually make and receive external calls. Assign licenses from the Microsoft 365 admin center under Users → Active users → select user → Licenses and apps.

Configure Teams Phone in the Admin Center

1. In the Teams admin center, go to Voice → Phone numbers and assign or port numbers to users
2. Go to Voice → Dial plans to define normalization rules for your organization
3. Configure Call queues and Auto attendants for inbound call routing
4. Enable Voicemail via Exchange Online integration — voicemail messages are delivered to the user’s Outlook inbox
5. Configure Emergency calling policies to ensure users can reach emergency services from any location

Copilot in Teams Phone Calls

Moreover, since late 2025, Microsoft 365 Copilot is generally available in Teams Phone. After a call ends, Copilot generates a call summary, highlights key insights, and suggests follow-up actions in the Calls app side panel. For compliance-heavy organizations, Teams Phone supports third-party ISV compliance recording at the call queue level, ensuring all routed calls meet recording obligations.

Manage Teams Phone with PowerShell

Furthermore, PowerShell is the most efficient way to manage Teams Phone at scale. Key cmdlets include:

# Assign a phone number to a user
Set-CsPhoneNumberAssignment -Identity "user@domain.com" -PhoneNumber "+15551234567" -PhoneNumberType CallingPlan

# Get all users with Teams Phone enabled
Get-CsOnlineUser | Where-Object {$_.EnterpriseVoiceEnabled -eq $true} | Select DisplayName, LineUri

# Configure a dial plan
New-CsTenantDialPlan -Identity "DP-France" -NormalizationRules @{Add = $rule}

For broader Teams administration, see our guide on applying email policies in Teams with PowerShell and our overview of Teams for business productivity.

Call Queues and Auto Attendants

Specifically, call queues hold incoming calls in a queue when all agents are busy and play music or a recorded message while callers wait. Configure them in Teams admin center → Voice → Call queues. Each queue needs a resource account with a phone number assigned and a list of agents (individual users or a Teams channel). Auto attendants route inbound calls based on a menu system — callers press 1 for sales, 2 for support — and can transfer to a call queue, a user, or an external number. Both features integrate with Copilot in Teams for post-call summaries.

Emergency Calling and Location Policies

Importantly, configuring emergency calling correctly is a legal requirement in most countries. In Teams Phone, assign an emergency calling policy to each user that defines the emergency numbers and the notification behavior when an emergency call is placed. For hybrid work scenarios, configure dynamic emergency location so Teams automatically detects the user’s physical location based on their network or GPS — critical when employees work from multiple offices or from home. Review the official Microsoft emergency location documentation for country-specific requirements. See also our guide on Teams security and compliance.