How to Set Up Microsoft Teams Phone for Your Business

Microsoft Teams Phone has rapidly become the go-to business telephony solution for UK organisations looking to replace ageing PBX systems, reduce telecoms costs, and unify their communications. By extending the Microsoft Teams platform with full PSTN calling capabilities, Teams Phone lets your staff make and receive calls to landlines and mobiles — all from the same app they already use for chat, meetings, and collaboration.

But deploying Teams Phone involves more than flipping a switch. From choosing the right PSTN connectivity model and licensing tier to porting existing numbers, configuring auto-attendants, and monitoring call quality, there are real decisions that affect cost, reliability, and user experience. Get it right, and you’ll have a modern, flexible phone system that scales with your business. Get it wrong, and you’ll face frustrated staff, missed calls, and unexpected bills.

At Cloudswitched, we’ve deployed Microsoft Teams Phone for hundreds of UK businesses — from five-person start-ups to multi-site enterprises. This guide walks you through every step of the process, with UK-specific advice on licensing, connectivity, number porting, and ongoing management.

What Is Microsoft Teams Phone?

Microsoft Teams Phone (formerly known as Phone System) is an add-on to Microsoft Teams that provides Private Branch Exchange (PBX) capabilities in the cloud. It replaces your traditional on-premises phone system with a cloud-hosted solution that runs entirely within the Microsoft 365 ecosystem.

With Teams Phone, your employees can place and receive PSTN calls (i.e. calls to and from regular phone numbers), manage voicemail, transfer calls, set up call queues and auto-attendants, and more — all from the Teams desktop app, mobile app, or a certified desk phone. Because it’s built into Teams, every call, chat, and meeting lives in one place, eliminating the need for separate telephony hardware and software.

For UK businesses already using Microsoft 365, Teams Phone is a natural next step. It reduces vendor complexity, cuts costs, and gives remote and hybrid workers the same phone capabilities they’d have sitting at an office desk.

Step 1: Understand Licensing Requirements

Before anything else, you need the right Microsoft 365 licences in place. Teams Phone is not included in standard Microsoft 365 plans — it requires either a dedicated add-on or a bundled plan. Here’s how the licensing breaks down for UK organisations:

Licence / Plan	Includes Teams Phone	Includes Calling Plan	UK Price (Per User/Month)
Microsoft 365 Business Basic/Standard/Premium	No	No	£4.60 – £18.20
Teams Phone Standard (add-on)	Yes	No	£6.70
Teams Phone with Calling Plan (bundle)	Yes	Yes (domestic)	£12.50
Microsoft 365 E5	Yes	No	£48.10
Microsoft Teams Essentials	No	No	£3.00

The most common route for UK SMBs is to add the Teams Phone Standard licence at £6.70 per user per month to an existing Microsoft 365 Business plan, then choose a PSTN connectivity method separately. Larger organisations on Microsoft 365 E5 already have Teams Phone included and only need to arrange PSTN connectivity.

Step 2: Choose Your PSTN Connectivity Model

This is the single most important decision in your Teams Phone deployment. PSTN connectivity is how your Teams users actually connect to the public telephone network — enabling calls to and from landlines, mobiles, and international numbers. Microsoft offers three options for UK businesses:

Which Connectivity Model Should You Choose?

For most UK businesses with fewer than 250 users, Operator Connect offers the best balance of simplicity, cost, and flexibility. You get carrier-grade reliability from a UK-regulated provider, broad number availability (including geographic numbers for every UK area code), and the convenience of managing everything through the Teams Admin Centre — without the complexity of managing your own Session Border Controllers.

Microsoft Calling Plans suit very small organisations (under 20 users) that want the simplest possible setup and don’t need geographic numbers in specific UK regions. However, minute bundles can become expensive for heavy callers, and number availability outside major UK cities is limited.

Direct Routing is ideal for larger enterprises that already operate SIP trunks and SBCs, or need complex routing scenarios (e.g. integrating with contact centre platforms, analogue devices, or multi-country deployments). It offers the most flexibility but requires in-house expertise or a managed service partner like Cloudswitched.

Step 3: Plan Your Number Strategy

Before you start porting or acquiring numbers, plan your number strategy carefully. Consider the following:

• Geographic numbers (01/02): Do you need local presence in specific UK cities? Customers in Birmingham, Manchester, or Edinburgh may expect a local dialling code.
• Non-geographic numbers (03): These are charged at local rate from any UK phone and project a national presence. Popular with businesses operating across multiple regions.
• Freephone numbers (0800/0808): Still valuable for customer service lines, especially in B2C sectors.
• Existing numbers: Virtually all UK numbers can be ported to Teams Phone, but the process and timeline differ by provider and number type.
• International DDIs: If you have staff or customers in the EU or elsewhere, consider whether you need local numbers in those countries.

Number Porting in the UK

Number porting is the process of transferring your existing phone numbers from your current provider to your Teams Phone setup. In the UK, Ofcom mandates that all providers must support porting, but the timescales and processes vary:

To initiate a port, you’ll need your current provider’s account details, a Letter of Authority (LOA), and the specific numbers to transfer. Cloudswitched handles this entire process for our clients, coordinating with both the losing and gaining carriers to ensure zero downtime on the porting day.

Step 4: Configure Auto-Attendants & Call Queues

Auto-attendants and call queues are the backbone of any professional phone system. They ensure callers reach the right person or department without relying on a human receptionist for every call. Teams Phone includes both features at no extra cost.

Auto-Attendants

An auto-attendant greets callers and provides a menu of options (“Press 1 for Sales, 2 for Support…”). In Teams, auto-attendants support:

• Business hours routing: Different menus and greetings for office hours, after hours, and bank holidays
• Nested menus: Multi-level IVR trees for complex organisations
• Dial-by-name directory: Callers can spell a name to reach someone directly
• Custom greetings: Upload recorded audio or use text-to-speech
• Holiday schedules: Automatically route calls differently on UK bank holidays
• Multiple languages: Useful for businesses serving diverse UK communities

Call Queues

Call queues distribute incoming calls across a group of agents. Key configuration options include:

Setting	Options	Recommended For
Routing Method	Attendant (all ring), Serial, Round Robin, Longest Idle	Longest Idle for even workload distribution
Overflow Threshold	Max calls in queue (1–200)	Set to 15–25 for most SMB support queues
Timeout	Max wait time before overflow action	45–90 seconds for sales, 120+ for support
Overflow Action	Voicemail, redirect, disconnect, shared voicemail	Redirect to backup queue or shared voicemail
Presence-Based Routing	On / Off	Always On — avoids ringing staff in meetings
Agent Opt-Out	Allowed / Not Allowed	Allow for flexible teams, restrict for dedicated agents
Music on Hold	Default or custom audio file	Custom branded audio for caller experience

A well-configured auto-attendant and call queue setup ensures that even small businesses project a professional image. Cloudswitched designs these call flows collaboratively with your team, mapping out every scenario before configuration begins.

Step 5: Set Up Voice Policies & Calling Policies

Microsoft Teams uses policies to control what users can and cannot do with their phone capabilities. As an administrator, you should review and configure the following:

• Calling Policies: Control whether users can make private calls, use call forwarding, set up simultaneous ring, access voicemail, and use delegation.
• Dial Plans: Normalise dialling behaviour for UK users. For example, ensure that dialling “0207” correctly routes to a London number, and that internal extension dialling works as expected.
• Emergency Calling Policies: Critical for UK compliance. You must configure emergency addresses for every user so that 999 calls route correctly to the nearest emergency service and provide accurate location information. Ofcom requires this.
• Voice Routing Policies (Direct Routing only): Define which calls go through which SIP trunks, with failover rules and cost-based routing.
• Caller ID Policies: Control whether users display their DDI, the company’s main number, or an anonymous number when making outbound calls.

Step 6: Prepare Your Network

Teams Phone call quality depends heavily on your network infrastructure. Poor network conditions are the number one cause of call quality complaints after deployment. Before going live, assess and optimise the following:

Key Network Actions

1. Run the Microsoft Teams Network Assessment Tool from every office location. It tests bandwidth, jitter, packet loss, and latency against Microsoft’s recommended thresholds.
2. Enable QoS (Quality of Service) on your switches and firewalls. Tag Teams voice traffic with DSCP EF (Expedited Forwarding, value 46) so it gets priority over web browsing and file downloads.
3. Ensure split-tunnel VPN if staff use VPN. Teams media traffic should go directly to the internet, not through a VPN concentrator, to avoid latency and jitter.
4. Check firewall rules. Teams Phone requires outbound UDP on ports 3478–3481 to Microsoft’s relay servers. Blocking these ports will degrade or prevent calls.
5. Upgrade Wi-Fi if needed. If staff will make calls over Wi-Fi, ensure you have enterprise-grade access points (Wi-Fi 6 or later) with proper channel planning. Consumer-grade Wi-Fi causes dropped calls.

For UK businesses with multiple sites connected via BT/Openreach leased lines or SD-WAN, Cloudswitched conducts a full network assessment at every location before deployment, ensuring consistent call quality across the estate.

Step 7: Deploy Devices (Optional but Recommended)

While Teams Phone works perfectly through the desktop and mobile app, many UK businesses still want physical desk phones — especially for reception desks, warehouses, and meeting rooms. Microsoft certifies a range of devices:

• IP desk phones: From Poly, Yealink, and AudioCodes. Range from basic (£80) to executive models with touch screens (£400+).
• Conference phones: Poly Trio and Yealink CP series for meeting rooms.
• Teams Displays: Small touchscreen devices (like the Lenovo ThinkSmart View Plus) that show calendar, calls, and chat.
• Headsets: Certified headsets from Jabra, Poly, and EPOS ensure the best audio quality. The Jabra Evolve2 75 and Poly Voyager Focus 2 are popular choices for UK offices.
• Common area phones: Low-cost devices for lobbies, kitchens, and shared spaces. These use a dedicated “Common Area Phone” licence at £6.70/month rather than a full user licence.

All certified devices are provisioned and managed centrally through the Teams Admin Centre, with firmware updates pushed automatically. This is a significant operational advantage over traditional PBX handsets that required manual firmware management.

Step 8: Monitor Call Quality with the CQD

Once your Teams Phone system is live, ongoing monitoring is essential. Microsoft provides the Call Quality Dashboard (CQD) and Real-Time Analytics in the Teams Admin Centre to help you identify and resolve issues proactively.

Key metrics to monitor include:

• Poor Stream Rate (PSR): The percentage of audio streams rated as “poor” by Microsoft’s quality algorithms. Target: below 3%.
• Audio MOS (Mean Opinion Score): A 1–5 rating of perceived audio quality. Target: above 3.5 for all calls.
• Setup Failure Rate: Calls that fail to connect. Should be below 1%.
• Drop Rate: Calls that disconnect unexpectedly. Target: below 2%.
• Jitter and Packet Loss: Network-level indicators that directly affect call quality.

Cloudswitched provides managed monitoring for all our Teams Phone clients, with monthly call quality reports and proactive alerts when metrics degrade. We’ve found that catching network issues early — before users start complaining — is the key to maintaining confidence in the platform.

Step 9: Train Your Team

Even the best-configured phone system will fail if your team doesn’t know how to use it. Training should cover:

1. Making and receiving calls from the Teams desktop app, mobile app, and desk phone
2. Transferring calls (blind transfer vs. consultative transfer)
3. Managing voicemail — including setting up personal greetings and voicemail transcription
4. Using call park and pickup for shared office environments
5. Setting up delegates so PAs can answer calls on behalf of executives
6. Configuring call forwarding and simultaneous ring for hybrid working
7. Accessing call history and call analytics in the Teams app

We recommend a 30-minute live training session per department, supplemented by quick-reference guides. Adoption rates are significantly higher when staff see the system in action rather than reading documentation.

Teams Phone Deployment Timeline

A typical Teams Phone deployment for a UK business with 50–200 users follows this timeline:

End to end, most deployments take 6–10 weeks from project kick-off to full go-live. The longest lead item is typically number porting, which is why we recommend starting the porting process as early as possible — ideally in parallel with configuration and testing.

Common Mistakes to Avoid

Having deployed Teams Phone for organisations across the UK, we’ve seen the same mistakes repeated. Here are the most common pitfalls and how to avoid them:

• Skipping the network assessment: Teams Phone is unforgiving of poor networks. Always test before deploying, especially at branch offices with older Openreach connections.
• Ignoring emergency calling compliance: Ofcom requires accurate location data for 999 calls. This is non-negotiable and must be configured for every user and every site.
• Over-complicating auto-attendants: Callers abandon IVR menus after two levels. Keep menus simple and provide a “press 0 for a person” option at every level.
• Not planning for hybrid workers: Staff working from home need the same call quality as office-based staff. Ensure home broadband is adequate and provide quality headsets.
• Cancelling the old phone service too early: Keep your existing lines active until number porting is fully confirmed. Premature cancellation can result in permanently lost numbers.
• Forgetting common areas: Lifts, reception desks, warehouses, and meeting rooms all need phone access. Plan for common area phones and their licensing.

How Much Does Teams Phone Cost for a UK Business?

Total cost depends on your licensing tier, connectivity model, and device requirements. Here’s a realistic breakdown for a typical 50-user UK business:

At £543.50 per month for 55 phone-enabled users, this works out to approximately £9.88 per user per month — significantly less than most traditional PBX or hosted VoIP solutions in the UK, which typically cost £15–£25 per user. Add in the savings from consolidating your telecoms and collaboration tools into a single platform, and the ROI is compelling.

“We reduced our monthly telecoms bill by 42% after moving to Teams Phone with Cloudswitched. But the real win was giving our remote staff the same phone capabilities as office-based teams — our customers can’t tell the difference.” — Operations Director, 120-person professional services firm, London

Why Work with Cloudswitched?

Deploying Microsoft Teams Phone is a significant project that touches licensing, networking, telephony, compliance, and user experience. While it’s technically possible to do it yourself through the Teams Admin Centre, most UK businesses benefit from working with an experienced partner who can:

• Design the optimal licensing and connectivity model for your budget and requirements
• Conduct a thorough network assessment across all your UK sites
• Handle number porting end to end, coordinating with BT, Openreach, and other carriers
• Configure auto-attendants, call queues, and policies to match your business processes
• Ensure full Ofcom compliance for emergency calling
• Provide ongoing call quality monitoring and support
• Train your staff to get the most from the platform

As a Microsoft Solutions Partner, Cloudswitched has the certifications, experience, and UK-specific knowledge to deliver a smooth, professional Teams Phone deployment. We handle everything from initial planning to post-go-live support, so your team can focus on running the business.