Microsoft Teams Phone System Australia: Is It Right for Your Business? (2026)

Microsoft Teams Phone is a legitimate business phone system for Australian organisations already embedded in Microsoft 365 - but it is not the right fit for every business, and Microsoft's licensing page reads like tax law. This guide gives you a direct answer: what Teams Phone actually is, what it costs in AUD, how the three calling options compare, where it works well, and where a specialist VoIP provider will serve you better. By the end you will know whether Teams Phone makes sense for your business or whether you should be looking elsewhere. Many Australian businesses already pay for Microsoft 365 and ask a completely reasonable question: can I just use Teams for phone calls? Sometimes the answer is yes. Sometimes the answer is: you can, but you will pay more and get less than a purpose-built VoIP service would give you. Understanding which situation you are in is the entire point of this guide.

What Microsoft Teams Phone Actually Is

Microsoft Teams is a collaboration platform - chat, video meetings, file sharing. Out of the box, it does not connect to the public telephone network (PSTN). You cannot call a regular phone number from Teams without an additional licence and a calling configuration. That additional capability is called Teams Phone (previously known as Teams Calling or Phone System).Teams Phone is a cloud-based PBX that Microsoft hosts. Once enabled, the Teams application on your desktop, laptop, or mobile becomes a softphone. Staff can make and receive calls to regular phone numbers through the same interface they use for internal chats and video calls. Desk phones are optional - most Teams Phone deployments use headsets or the built-in speakers and microphone on a device.The Teams Phone add-on licence activates the PBX functionality inside Microsoft's cloud. It does NOT give you a phone number or connect you to the phone network. For that, you need a separate calling configuration - which brings us to the three options below.

The Three Calling Options for Teams Phone in Australia

This is where most business owners get lost. Microsoft offers three distinct ways to connect Teams Phone to the real-world telephone network. Each has different costs, different carriers, and different flexibility.

Option 1: Microsoft Calling Plans

Microsoft's own carrier service. You buy phone numbers and call minutes directly from Microsoft. Microsoft handles the connection between Teams and the PSTN. This is the simplest setup - everything comes from Microsoft, one bill, one vendor. The catch: Microsoft Calling Plans are not available in Australia as a direct domestic calling product at the time of writing. Australian businesses cannot simply add a Microsoft Calling Plan to make local AU calls. This is a significant gap. Microsoft's Calling Plan availability is concentrated in North America and parts of Europe.For Australian businesses, this means Microsoft Calling Plans are effectively off the table for domestic calling. You will need Option 2 or Option 3.

Option 2: Direct Routing

Direct Routing connects Teams Phone to the PSTN through a third-party carrier's Session Border Controller (SBC). You contract with an Australian VoIP carrier who provides SIP trunks. Those SIP trunks are connected to Microsoft's Teams Phone infrastructure through a certified SBC. Calls to regular Australian phone numbers (mobile, landline, 1300) route through your carrier's network.Direct Routing is the standard path for Australian businesses wanting Teams Phone. It gives you full control over your carrier - you can choose an Australian provider, negotiate call rates, port your existing numbers, and get local support. The downside: it adds complexity. You need a compatible SBC (either hardware in your environment or a cloud-hosted SBC from your carrier), and you need someone capable of configuring the Teams Phone routes and dial plans correctly.Australian carriers offering Direct Routing for Teams include Telstra, Optus, Symbio Networks, Vonage (now Ericsson), Vocus, and several specialist VoIP carriers. Most of these providers offer hosted SBC services so you do not need to purchase and manage SBC hardware yourself.

Option 3: Operator Connect

Operator Connect is Microsoft's managed version of Direct Routing. Participating carriers have a certified, pre-integrated connection with Microsoft's Teams infrastructure. You select a carrier from the Operator Connect directory inside Teams Admin Centre, and the carrier manages the SBC and PSTN connection on your behalf. No SBC hardware to manage, no complex dial plan configuration.Operator Connect is simpler than full Direct Routing but is still carrier-dependent. In Australia, Operator Connect carrier availability is limited compared to North American markets. Telstra is the primary Operator Connect partner in Australia. If you want to use a smaller specialist carrier or have an existing SIP trunk relationship with a non-Microsoft-certified provider, Operator Connect may not be an option.

Microsoft Teams Phone Licensing Costs in Australia (AUD)

This is the section Microsoft's own documentation makes as confusing as possible. Here is a plain-English breakdown of what you actually need to pay, per user, per month in AUD. All prices are indicative based on Microsoft Australia pricing and subject to change. Check Microsoft's current pricing at microsoft.com/en-au before committing.

Step 1: The Base Microsoft 365 Licence

Teams Phone requires a Microsoft 365 or Office 365 licence that includes Teams. The main AU business options: E5 is the only licence that includes Teams Phone (Phone System) by default. Every other licence tier requires a separate add-on. If your business is already on E5 for compliance, security, or analytics reasons, the phone system functionality is essentially already paid for.

Step 2: The Teams Phone Add-On

If you are not on E5, you need to add the Teams Phone (Phone System) add-on to enable PBX functionality. This is approximately $10.80 AUD per user per month at current Microsoft AU pricing. This gives you the PBX capability - voicemail, auto attendant, call queues, call transfer, hold music. It still does not give you PSTN connectivity. You still need a calling option (Direct Routing or Operator Connect, as described above).

Step 3: Carrier Costs (Direct Routing or Operator Connect)

The carrier component is priced separately by your chosen AU VoIP carrier. Costs vary but typically include: a per-channel or per-seat SIP trunk fee, call costs per minute (or bundled calling plans), and sometimes a number porting or DID number fee. Budget approximately $15 to $30 AUD per seat per month for carrier costs depending on call volume and the carrier you choose. Dedicated SBC hosting fees may also apply with some carriers for Direct Routing configurations.

Total Per-User Cost: Teams Phone vs Alternatives

This is the number most people do not see until they add everything up. The following comparison is for a typical small business user on the minimum required Microsoft 365 licence with Teams Phone enabled, compared to a standalone hosted PBX VoIP service. For a business on Business Basic plus Teams Phone add-on plus Direct Routing carrier, the all-in cost is roughly $34 to $50 per user per month. A standalone hosted PBX from a specialist Australian VoIP provider typically comes in at $25 to $45 per user per month, with more calling features included at the lower price points. The Microsoft 365 licence cost is only 'free' if your business would be paying for it regardless. If you are acquiring Microsoft 365 specifically to enable Teams Phone, factor the full licence cost in.The maths starts to look different if you are already paying for M365 E5, where Teams Phone is included. In that case, you only pay the carrier cost - and at $15 to $30 per user per month for SIP trunks, that becomes genuinely cost-competitive. If your business is already on E5 for other reasons, Teams Phone may be the cheapest phone system option available to you.

What Microsoft Teams Phone Does Well

Teams Phone has genuine strengths. Be clear-eyed about them.Unified platform: staff use one application for internal chat, video calls, file sharing, and external phone calls. No switching between a Teams window and a separate softphone. For businesses where most communication is already happening in Teams, this is a real productivity gain. Call history, voicemail, and contact management all live in the same place as everything else.Presence and availability: Teams Phone inherits the Teams presence system. When a colleague is in a meeting, on a call, or presenting their screen, their status updates automatically. Inbound calls can respect presence - if someone is presenting, calls go to voicemail instead of interrupting them. This is difficult to replicate in a standalone PBX without custom integrations.Internal calling at no additional cost: calls between Teams users within the same organisation are free regardless of where they are in the world. For businesses with staff across multiple AU states or with remote workers, this eliminates per-minute internal call costs entirely.Compliance and recording: Teams Phone integrates with Microsoft's compliance and eDiscovery tools. For regulated industries (finance, legal, healthcare) that already use Microsoft's compliance infrastructure, call recording and retention can be managed through the same tools as email and document compliance.Device flexibility: staff can take calls on any device running Teams - Windows, Mac, iOS, Android. A user travelling interstate takes their full phone system with them on their laptop. Calls to their business number ring on their laptop or mobile, and outbound calls show the business number. No call forwarding rules needed.

What Microsoft Teams Phone Does Poorly

Teams Phone has real limitations that are frequently glossed over in vendor documentation. Here is what to watch for.Call flow complexity: Teams Phone's auto attendant and call queue features are functional but basic compared to specialist PBX platforms. If you need complex IVR trees (press 1 for billing, press 2 for support, press 3 for the Melbourne branch, with sub-menus and overflow routing), you will find Teams Phone less flexible than 3CX, FreePBX, or a well-configured hosted PBX. Basic call queues and simple IVRs are fine; multi-level call routing logic gets awkward quickly.Reception console: There is no dedicated operator or receptionist console in Teams Phone. Large businesses with a front-of-house receptionist handling dozens of inbound calls, transferring to extensions, and monitoring call status will find Teams Phone inadequate for that use case. Third-party solutions exist (Luware, Attendant Console for Teams) but they add cost and complexity.Analog device support: Teams Phone does not support analog telephones, fax machines, or DECT cordless phone systems directly. If your business relies on a fax line, an analog door entry intercom wired to the phone system, or a paging system connected to the PBX, you will need additional adapter hardware (ATAs). This is a common problem in trades, healthcare, and manufacturing environments.IT team requirement: Teams Phone is not a plug-and-play system for a 3-person business. Initial configuration of Direct Routing - dial plans, voice routing policies, SBC peering, emergency calling configuration - requires technical knowledge. Operator Connect reduces this burden but does not eliminate it. Ongoing management (adding users, adjusting call queues, configuring auto attendants) happens through Teams Admin Centre, which has a learning curve. For businesses without dedicated IT support, the management overhead is real.Emergency calling (000): Teams Phone must be configured with a registered emergency address for each user to comply with Australian emergency calling requirements. For remote workers and mobile users, the registered address may not reflect their actual location at the time of an emergency. This is a compliance issue that requires deliberate configuration, not an assumption. Your Direct Routing carrier or Operator Connect provider must support emergency calling with location data.Internet dependency and power outage: like all cloud VoIP systems, Teams Phone stops working if your internet connection fails or power goes out. Unlike some standalone VoIP systems, Teams Phone does not support PSTN fallback lines by default. If call continuity during outages is a hard requirement, you need a contingency plan - whether that is a mobile number overflow, a separate SIP trunk with failover routing, or a cellular hotspot for the office.

Compatible Desk Phones for Microsoft Teams

Not all SIP desk phones work with Teams Phone. Microsoft maintains a list of certified Teams IP phones. These are phones that run a native Teams client or are certified for Teams Phone operation. Standard SIP phones can still be used via Direct Routing with the appropriate configuration, but for the best integrated experience (presence, calendar sync, one-touch join for meetings), use a certified device.Certified Teams Phone desk phones available in Australia include: Yealink MP series (MP50, MP52, MP54, MP56, MP58), Poly CCX series (CCX 400, CCX 500, CCX 600, CCX 700), Audiocodes C435HD, and Lenovo ThinkSmart View. Pricing ranges from approximately $200 AUD for entry-level Yealink MP50 models to $800+ AUD for premium Poly CCX 700 units with colour touchscreens.For teams primarily using headsets with desktop or laptop computers, a dedicated desk phone may not be necessary at all. A quality USB or Bluetooth headset certified for Teams (Jabra, Poly, Sennheiser) costs $150 to $450 AUD and provides a superior call experience on a laptop compared to a basic desk phone.See our SIP desk phone guide for a broader comparison of desk phones for Australian VoIP deployments, including options for non-Teams setups.

Direct Routing Providers in Australia

If you choose Direct Routing as your Teams Phone calling path, you need an Australian carrier that provides certified SBC connectivity for Teams. Here are the main options in the AU market.Telstra: the largest AU carrier, offers both Direct Routing and Operator Connect for Teams. Telstra's scale means broad geographic coverage and strong SLA commitments, but pricing typically reflects the enterprise customer rather than the SMB. 1300 number support and number porting to Telstra SIP trunks is well-documented.Symbio Networks: a wholesale and business SIP carrier with a strong AU presence. Symbio provides Direct Routing solutions and has broad number porting capability across Australian carriers. More competitive pricing than Telstra for mid-market deployments.Vocus: enterprise-focused carrier with national fibre infrastructure. Direct Routing solutions aimed at mid-to-large deployments. Strong in multi-site AU businesses.Vonage / Ericsson: multinational carrier with Australian presence. Direct Routing solutions available. Better suited to businesses with global PSTN requirements alongside AU.Smaller specialist VoIP carriers may also offer Direct Routing SBC services. Ask any carrier whether their SBC is certified for Microsoft Teams Direct Routing before signing. Microsoft publishes its list of certified SBC vendors - confirm your carrier uses a device from that list.

When Teams Phone Makes Sense for Australian Businesses

Teams Phone is not the right fit for every business. It is the right fit for a specific type of business. Here is how to know if you are in that category.You are already paying for Microsoft 365 E5: Teams Phone is included. Your carrier cost is the only incremental spend. At $15 to $30 per user per month for Direct Routing SIP trunks, this is competitive with any standalone VoIP service. The unified platform benefit is effectively free.You have 10 or more seats and heavy internal communication: at scale, the unified platform benefit compounds. Staff are already in Teams all day. Adding phone calls to the same interface reduces context switching and training cost. The Teams Phone admin tooling also scales better with larger deployments - bulk user management, policy groups, and compliance integration become meaningful advantages.Your communications are primarily internal or video-first: Teams Phone shines when most communication is internal (between staff, not to external customers). Businesses that conduct most client interaction via Teams meetings, not phone calls, get maximum value from the unified platform and minimum exposure to its call flow limitations.You have an IT team or a capable Microsoft partner: Direct Routing configuration is not a task for a non-technical business owner. If you have an IT department or an established relationship with a Microsoft partner who manages your M365 tenancy, they can own the Teams Phone configuration. The ongoing management overhead is manageable with the right support.You are in a regulated industry already using Microsoft compliance tools: finance, legal, and healthcare businesses already using Microsoft's Purview compliance tools can extend call recording and retention to Teams Phone without adding a separate compliance platform. That integration is difficult to replicate with a standalone VoIP provider.

When Teams Phone Does NOT Make Sense

Be honest with yourself here. For many Australian small businesses, Teams Phone is the wrong tool.You have 1 to 5 seats and light Microsoft 365 usage: at small scale, the unified platform benefit is minimal and the licensing overhead is real. A 3-person business on Microsoft 365 Business Basic paying $8.60 + $10.80 (Teams Phone add-on) + $20 (carrier) per seat equals roughly $39 per user per month before GST - for a feature set that a specialist VoIP provider delivers at $25 to $35 per seat with better call management tools, local Australian support, and no configuration complexity. There is almost no scenario where Teams Phone is the obvious choice for a 1-5 seat business that is not already on E5.You have heavy inbound call handling: if your business runs a reception function, a contact centre, or handles high volumes of inbound calls that need sophisticated routing, queuing, and agent management, Teams Phone's basic call queue and IVR features will frustrate you. A purpose-built contact centre solution or a hosted PBX with advanced call flow tools will serve you better. See our VoIP phone system guide for provider options.You have no IT support: without someone who understands Microsoft Teams Admin Centre, PowerShell scripting (sometimes required for dial plan configuration), and SBC concepts, Direct Routing setup will be painful. Operator Connect is simpler but still requires configuration work. If you are a non-technical business owner who wants a phone system that works without complexity, a specialist VoIP provider with local support will get you operational faster and keep you there more reliably.You need analog device support: fax lines, door intercoms wired to the PBX, paging systems, DECT wireless handsets, or nurse call systems connected to the phone system are not supported natively by Teams Phone. These are common in medical practices, aged care facilities, retail stores, and manufacturing environments. If analog device integration is a requirement, Teams Phone is not your answer without significant additional investment in ATA adapters and workarounds.You are not yet on Microsoft 365: do not sign up for Microsoft 365 specifically to get Teams Phone. You will pay for features you do not need and lock yourself into Microsoft's licensing cycle for a phone system when you could simply choose a standalone VoIP provider. Microsoft 365 is a productivity platform that happens to include calling capability when licensed appropriately. Evaluate it as a productivity investment - if it makes sense, Teams Phone may follow naturally. Do not reverse that logic.

Teams Phone vs Hosted PBX: The Australian Reality

The most common comparison for Australian businesses is Teams Phone (via Direct Routing) versus a specialist hosted PBX VoIP service. This is not a clear win for either option - it depends on your starting point.If you are starting from zero and just need a business phone system: a specialist hosted PBX provider wins on cost, simplicity, feature set for inbound call management, and the availability of local AU support without a Microsoft partner relationship. You can be operational in a day. See our hosted PBX comparison guide for a full breakdown of the PBX options available in Australia.If you are already on M365 E5 and need phone calls: Teams Phone wins on cost and simplicity. You already own it. The carrier cost is the only incremental spend, and everything lives in one platform.If you are already on M365 Business or E3 and considering Teams Phone: do the maths for your specific seat count and calling requirements. The add-on plus carrier costs often exceed a standalone VoIP service, and the call management feature set is generally weaker for AU SMB use cases. Unless the unified platform benefit is a clear priority for your team, the numbers often favour a standalone VoIP provider.For more context on how Teams Phone compares to traditional and cloud PBX options from first principles, see our VoIP vs traditional phone guide and our overview of business phone system options for Australian businesses.

Number Porting to Teams Phone in Australia

If you are moving to Teams Phone from an existing phone system, you will likely want to port your existing Australian business numbers to the new platform. Number porting timelines in Australia are governed by ACMA regulations. Expect 5 to 10 business days for a standard geographic number port between AU carriers, and up to 15 to 20 business days if complications arise (incorrect account details, number on a bundled contract, or a carrier dispute).For Teams Phone via Direct Routing, number porting is handled by your chosen AU carrier, not by Microsoft. Microsoft does not control Australian number inventory. You port your numbers to your Direct Routing carrier, and they configure them in the SBC to route to your Teams environment. For Operator Connect, your Operator Connect provider (Telstra) manages the porting process.1300 and 1800 numbers add complexity. These are Smart Numbers regulated by the Australian Communications and Media Authority (ACMA) and managed through specific carriers. Confirm your Direct Routing carrier supports 1300/1800 number management before committing. Not all SIP carriers handle Smart Numbers. See our VoIP call quality guide for considerations around call quality during and after number migration.

What Most Businesses Get Wrong with Teams Phone

Mistake 1: Assuming Teams Phone is free because they already pay for Microsoft 365. It is not. Unless you are on M365 E5, you need to add the Teams Phone add-on ($10.80/user/month) AND a Direct Routing carrier (another $15 to $30/user/month). The all-in cost is often higher than a standalone VoIP service - and that standalone service will have better inbound call management features for most AU SMBs.Mistake 2: Starting with Teams Phone before sorting the underlying internet connection. Teams Phone is a cloud VoIP service. Like all VoIP, it is sensitive to network quality - jitter, packet loss, and upload bandwidth all affect call quality. On NBN business connections (NBN50 or above), this is rarely an issue for a small office. On a shared residential NBN connection in a busy building, call quality problems are common. Solve the connection quality first. See our VoIP call quality guide for the specific checks to run before deploying any cloud phone system.Mistake 3: Skipping the emergency calling configuration. Teams Phone requires a registered emergency address for each user. This is not optional for Australian deployments - businesses have obligations under Australian telecommunications regulations regarding 000 access. Many businesses configure Teams Phone, start using it, and never complete the emergency calling setup. If a staff member dials 000 from an unconfigured Teams Phone endpoint, the call may not connect correctly or may not provide location data to emergency services.

Your Next Steps

Use this checklist to determine whether Teams Phone is worth pursuing for your business:Step 1: Check your current Microsoft 365 licence tier. Log in to admin.microsoft.com and check what you are paying per user. If you are on E5, Teams Phone is already included - contact your Direct Routing carrier or Operator Connect provider to enable it. If you are on Business Basic, Standard, Premium, or E3, calculate the add-on cost before deciding.Step 2: Count your calling seats and model the cost. Multiply your seat count by ($10.80 Teams Phone add-on + your carrier quote) and compare to a standalone hosted PBX quote for the same seat count. For most businesses with fewer than 10 seats, the standalone VoIP provider will be cheaper. For businesses on E5 or with 20+ seats, Teams Phone often competes on cost.Step 3: Assess your call management requirements. Do you need complex IVR, a reception console, analog device integration, or fax? If yes, Teams Phone is likely the wrong choice. If your needs are simple (inbound calls to staff, basic voicemail, internal calling), Teams Phone is adequate.Step 4: Assess your IT capability. Do you have an IT team or a Microsoft partner managing your M365 tenancy? If yes, Teams Phone configuration is achievable. If no, lean towards a specialist VoIP provider with managed setup and local AU support.Step 5: Get a quote from both a Direct Routing carrier (for Teams Phone) and a specialist AU VoIP provider (for hosted PBX). Compare total cost, feature set, and support model. If you would like a recommendation based on your specific situation, use our free recommendation service and we will match you with the right provider.

Can I use Microsoft Teams as a phone system in Australia without extra licences?

No. Standard Microsoft Teams allows internal calls between Teams users, but connecting to the public telephone network (PSTN) to call regular Australian phone numbers requires the Teams Phone add-on licence (approximately $10.80 AUD/user/month on most M365 plans) plus a Direct Routing or Operator Connect carrier. Microsoft 365 E5 is the only licence that includes Teams Phone by default. There is no free path to calling regular phone numbers through Teams.

Is Microsoft Calling Plans available in Australia?

Microsoft Calling Plans (Microsoft's own carrier service) are not available for domestic Australian calls at the time of writing. Australian businesses need to use Direct Routing (a third-party AU carrier connected via a certified SBC) or Operator Connect (currently primarily Telstra in Australia) to enable PSTN calling in Teams Phone. Check Microsoft's current Calling Plan availability page for any updates, as Microsoft periodically expands country coverage.

How much does Microsoft Teams Phone cost per user per month in Australia?

The all-in cost depends on your M365 licence and calling configuration. For a Business Basic user with Teams Phone add-on plus Direct Routing carrier: approximately $34 to $50 AUD per user per month (around $8.60 M365 Business Basic + $10.80 Teams Phone add-on + $15 to $30 Direct Routing carrier). If you are on M365 E5 (which includes Teams Phone): approximately $101 to $116 AUD per user per month including E5 licence and carrier costs. A standalone hosted PBX VoIP service typically costs $25 to $45 AUD per user per month all-in. All prices are approximate and subject to change.

What is Direct Routing for Microsoft Teams?

Direct Routing is a method of connecting Microsoft Teams Phone to the public telephone network using a third-party Australian carrier instead of Microsoft's own calling service. Your carrier provides SIP trunks and connects them to your Teams Phone infrastructure through a certified Session Border Controller (SBC). This allows you to choose any compatible AU carrier, port your existing numbers, and access Australian carrier pricing for calls. Direct Routing is the standard approach for Teams Phone in Australia because Microsoft Calling Plans are not available for domestic AU calls.

Can I keep my existing Australian business phone number when moving to Teams Phone?

Yes. You can port your existing Australian business numbers (geographic numbers, mobile numbers, and in most cases 1300/1800 numbers) to Teams Phone via Direct Routing or Operator Connect. Number porting for Direct Routing is handled by your chosen AU carrier, not by Microsoft. Expect 5 to 10 business days for a standard port. 1300 and 1800 (Smart Numbers) require a carrier that specifically supports Smart Number management - confirm this with your carrier before signing.

Do I need a desk phone for Microsoft Teams Phone?

No. Most Teams Phone deployments use the Teams desktop application on a computer or laptop with a quality headset - no desk phone required. Microsoft-certified Teams IP phones are available from Yealink (MP series), Poly (CCX series), and Audiocodes if a desk phone experience is preferred. Standard SIP desk phones (non-Teams-certified) can also work with Teams Phone via Direct Routing with appropriate configuration, but will not have native Teams presence or meeting features.

Does Microsoft Teams Phone support 1300 numbers in Australia?

Teams Phone can support 1300 numbers, but only if your Direct Routing or Operator Connect carrier handles Australian Smart Numbers (1300/1800). Not all SIP carriers support Smart Number management. Check this explicitly with any carrier before committing to Teams Phone as your platform. Microsoft itself does not manage 1300 or 1800 numbers for Australian customers.

Is Teams Phone suitable for a small business with 2 to 5 staff in Australia?

Rarely. For a 2 to 5 seat business not already on M365 E5, the all-in cost of Teams Phone (M365 licence + Teams Phone add-on + Direct Routing carrier) typically exceeds the cost of a specialist Australian hosted PBX VoIP provider - which will also provide better inbound call management features (IVR, reception queues, analog device support) and local support without the IT complexity. Teams Phone makes more sense at 10+ seats, on E5 licensing, or where the unified platform benefit is a genuine priority.

Related reading:

• VoIP provider comparison
• 3CX vs FreePBX
• VoIP costs