Table of contents
- What is a Microsoft Teams phone system?
- How does a Teams phone system benefit your business?
- Is Teams Phone better than a standalone cloud PBX?
- Setting up Teams as your business line — what’s involved
- What to look for in a Teams Phone provider
- FAQ
If your team already lives in Microsoft Teams for chat, meetings, and file sharing, there’s a reasonable chance your business phone system is still a separate piece of the puzzle, a desk phone, a different app, or a legacy PBX that nobody outside the office can access. Staff end up juggling two systems for what is really one job: talking to customers and colleagues.
Teams Phone changes that by turning Microsoft Teams itself into your business phone line. Instead of a separate phone system sitting alongside Teams, calls, chat, and video all run through the one app your staff already have open most of the day. For Australian businesses already invested in Microsoft 365, it’s often a natural next step from cloud PBX rather than an entirely new category of purchase.
This guide explains what a Microsoft Teams phone system actually involves, how it benefits a small business day-to-day, and what to weigh up against a standalone cloud PBX before you commit.
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What is a Microsoft Teams phone system?
A Microsoft Teams phone system, often called Teams Phone, adds calling capability to Microsoft Teams so it can replace a traditional business phone line entirely. Instead of dialling out from a separate desk phone or PBX app, staff make and receive calls to landline and mobile numbers directly inside Teams, using the same app they already use for internal chat and video meetings.
To connect Teams to the public phone network, businesses typically pair it with a calling plan or SIP trunking through a telecom provider, since Microsoft itself doesn’t supply the underlying phone line. That’s where a local provider comes in, connecting your existing or new business number to Teams so external calls work exactly as they would through any other phone system.
How does a Teams phone system benefit your business?
One app, not two. Staff already spend much of their day in Teams for chat and meetings. Adding calling means one login, one interface, and one place notifications and history live, rather than switching between separate tools.
Calls follow the person, not the desk. Staff can answer their business number from a laptop, mobile, or Teams-certified desk phone, useful for hybrid teams who aren’t always at a fixed desk.
Simplifies IT management. With calling built into a platform many businesses already administer through Microsoft 365, there’s one less separate system to manage, patch, and pay for separately.
Familiar tools, less training. Because staff already know how to use Teams, the learning curve for adding calling is generally much shorter than introducing an entirely new phone system app from scratch.
Call history tied to conversations. A call from a client can sit in the same thread as their chat history and shared files, useful context that’s often lost when phone calls and messaging live in separate systems.
Is Teams Phone better than a standalone cloud PBX?
| Microsoft Teams phone system | Standalone cloud PBX | |
|---|---|---|
| Best suited to | Businesses already using Microsoft 365 and Teams daily | Businesses wanting a dedicated, phone-first system |
| App familiarity | Staff already know the interface | Requires learning a separate app or portal |
| Feature depth for calling | Solid core calling features | Often deeper call-centre style features (queues, analytics, recording) |
| Connecting to the phone network | Requires a calling plan or SIP trunk from a provider | Included as part of the service |
| Best for multi-site call routing | Capable, depends on configuration | Typically more purpose-built for this |
| Setup complexity | Ties into existing Microsoft 365 admin | Independent system, separate setup |
Neither option is automatically the right answer. If your business is already deeply embedded in Microsoft 365 and staff live in Teams all day, adding calling to it removes friction rather than creating it. If your priority is a phone-first system with deep call-handling features, like multi-site overflow routing or detailed call analytics, a dedicated cloud PBX may serve your business better.
Read more: Hosted PBX Explained: Skip the Server Room →
Setting up Teams as your business line — what’s involved
- Licensing check – confirm your Microsoft 365 plan supports Teams Phone, or that the correct add-on licence is in place for each user who needs calling.
- Choose your connection method – decide between a calling plan or SIP trunking to connect Teams to the public phone network, based on your business’s call volume and existing setup.
- Number porting – your existing business number is transferred across so nothing changes from a customer’s perspective.
- Call routing configuration – set up how incoming calls are handled, direct to a person, an auto-attendant, or a call queue.
- Testing before cutover – calls are tested through Teams before the old system is switched off, avoiding any gap in service.
- Staff walkthrough – a short briefing so your team knows how to make and receive calls, transfer, and check voicemail inside Teams from day one.
What to look for in a Teams Phone provider
1. Confirmed compatibility with your Microsoft 365 plan. Check which licence tier you’re on and whether Teams Phone requires an upgrade or add-on.
2. Clear connection options. Ask whether a calling plan or SIP trunk suits your call volume and existing infrastructure better, and what each costs.
3. Managed number porting. Confirm your existing number transfers with no gap in service, and check the timeline before any old line is disconnected.
4. A backup for internet outages. Since Teams Phone runs over your internet connection, ask whether calls can fail over to a mobile if the connection drops.
5. Local, contactable support. If a call routing rule needs adjusting or something’s not working right, Australian-based support that understands both Teams and telephony matters more than a generic Microsoft support queue.
FAQ
Can Microsoft Teams replace my business phone system entirely?
Yes, with the right calling plan or SIP trunk connected, Teams can handle all inbound and outbound business calls, replacing a separate desk phone system.
Do I need a special Microsoft 365 licence for Teams Phone?
Often yes, calling capability typically requires a specific licence tier or add-on beyond a standard Teams subscription. Check your current plan before assuming it’s included.
Can I keep my existing business number if I switch to Teams Phone?
Yes. Your number is ported across as part of the setup process, so customers keep dialling the same number they always have.
What happens if my internet connection goes down?
Since Teams Phone relies on your internet connection, an outage will affect calls unless a failover option, such as forwarding to a mobile, has been configured in advance.
Is Teams Phone suitable for a business with multiple locations?
It can be, depending on how call routing is configured. Businesses with more complex multi-site routing needs may find a dedicated cloud PBX offers more built-in flexibility.
Do staff need training to use Teams Phone?
Minimal, if they’re already using Microsoft Teams for chat and meetings. Adding calling is generally a short walkthrough rather than learning an entirely new system.
One app, one line, less to manage
For a business already running on Microsoft 365, turning Teams into your business phone line removes a separate system from your day-to-day operations rather than adding one. It’s a genuine option worth weighing against a standalone cloud PBX, depending on how your team already works.
Nexgen has helped Australian businesses set up and migrate phone systems, including Teams-based calling, for 17 years, with local support and managed number porting from start to finish. Get in touch with our team or call 1300 020 402 to find out whether Teams Phone is the right fit for your business.