For most Australian businesses, the office phone system has not changed much in decades. A physical PBX box sits in a comms room, desk phones sit on desks, and the whole arrangement involves a separate provider, a separate bill, and a separate set of hardware to maintain. Microsoft Teams Phone changes that model entirely — bringing business calling into the same platform your team already uses for chat, video, and document collaboration.

As Australian businesses continue their shift to cloud-first operations, the traditional PBX is increasingly an anomaly: a costly, location-dependent piece of hardware that does not travel with your workforce and does not integrate with the tools that run the rest of your business. Teams Phone is the straightforward replacement, and for businesses already on Microsoft 365, it requires no new platform — just the right licencing configuration.

What Microsoft Teams Phone Is and How It Works

Microsoft Teams Phone is Microsoft's cloud-based phone system, built directly into the Teams platform. It replaces the functionality of a traditional PBX — handling inbound and outbound calls to regular phone numbers, voicemail, call routing, and auto-attendants — without any on-premises hardware.

Calls are made and received through the Teams app on a laptop, desktop, smartphone, or tablet. A Teams-certified desk phone can also be used if your team prefers a physical handset. For most Australian SMBs, the combination of the Teams desktop app and a quality headset replaces the desk phone entirely, at no additional hardware cost.

There are two ways to connect Teams Phone to the public telephone network in Australia:

• Microsoft Calling Plans: Microsoft acts as your telco. You purchase calling credits or a domestic calling plan directly from Microsoft, and they handle the PSTN connectivity. This is the simplest option and is available in Australia.
• Direct Routing: Your existing Australian carrier or SIP trunk provider connects to Teams Phone via a Session Border Controller (SBC). This allows businesses to keep their existing telco relationship and pricing while moving the phone system itself to Teams. Direct Routing is the more common choice for businesses with significant existing call volumes or complex routing requirements.

In both cases, existing Australian phone numbers — including 1300, 1800, and geographic numbers — can be ported to Teams Phone, so your business retains its existing contact details throughout the transition.

Key Features Australian Businesses Get with Teams Phone

Teams Phone includes the full feature set that Australian businesses expect from a business phone system, plus capabilities that on-premises PBX hardware cannot deliver:

• Auto-attendants and call queues: Configure professional greetings and routing menus — "Press 1 for accounts, press 2 for support" — and manage call queues for teams with shared incoming call load. These are built directly into the Teams Admin Centre and require no specialist PBX programming knowledge to set up or modify.
• Voicemail with transcription: Voicemails are transcribed automatically and delivered to the recipient's Teams inbox as readable text, allowing quick review without listening to the full recording.
• Call recording: Teams Phone supports call recording for compliance and quality purposes, with recordings stored securely within Microsoft's cloud infrastructure. For Australian businesses with legal or regulatory obligations around call recording, this is a significant advantage over standalone recording systems.
• AI call summaries: With the right licencing, Teams Phone integrates with Microsoft's AI capabilities to provide automatic summaries of calls, identifying key points and follow-up actions — extending the same intelligent summarisation available in Teams meetings to voice calls.
• Teams Phone Mobile: This capability allows users to make and receive business calls through their Teams app while presenting their business number to the recipient, even when calling from a personal mobile. This is particularly useful for Australian staff who are frequently on the road and do not want to carry two phones or give out a personal number for work calls.
• Real-time noise suppression: Teams Phone inherits Teams' AI-powered background noise suppression, filtering out ambient noise on calls — relevant for Australian businesses where staff regularly work from home, open-plan offices, or on-site at client locations.

Teams Phone vs Traditional PBX: The Cost and Flexibility Comparison

For Australian businesses evaluating the switch, the cost comparison is often the starting point. Traditional PBX maintenance involves hardware support contracts, carrier charges for line rental and call costs, and an on-site system that typically requires specialist support for any configuration change — adding a handset, adjusting call routing, or updating voicemail greetings.

Teams Phone pricing is per-user, predictable, and bundled with the broader Microsoft 365 licensing stack. For businesses already on Microsoft 365 Business Premium, the incremental cost of adding Teams Phone licencing is typically modest compared to the full ongoing cost of maintaining a separate phone system and its associated hardware.

The operational advantages go beyond cost. Adding a new user to Teams Phone takes minutes in the Admin Centre. Changing routing, updating auto-attendant scripts, and managing voicemail are all self-service, browser-based operations — rather than requiring a specialist to attend your site or connect remotely to a PBX appliance. When staff work from multiple locations, their business number follows them automatically without any reconfiguration.

One requirement that must not be overlooked: emergency calling — 000 in Australia — requires specific configuration in Teams Phone to ensure location data is passed correctly to emergency services. This is a non-negotiable compliance requirement and should be explicitly verified and tested during any Teams Phone deployment before going live.

Which Australian Businesses Should Consider Making the Switch

Teams Phone is most immediately relevant for Australian businesses in one of the following situations:

• An existing PBX system approaching end of life, where the choice is between a hardware refresh and a cloud migration
• A business with staff who work across multiple locations or from home, where a location-dependent phone system creates daily friction and missed calls
• A business already on Microsoft 365 Business Premium that wants to consolidate technology spend and reduce the number of vendors managing their communications infrastructure
• A business adding headcount where expanding an existing PBX creates visible cost and complexity overhead each time a new user is onboarded

Teams Phone is not the right fit for every organisation — businesses with highly complex contact centre requirements or non-standard carrier arrangements may need to evaluate purpose-built enterprise telephony platforms alongside it. But for the majority of Australian SMBs running standard business operations with 10 to 200 users, it is a genuine and cost-effective replacement for traditional telephony that also reduces the vendor and hardware footprint.

Frequently Asked Questions

Can Australian businesses keep their existing phone numbers when switching to Microsoft Teams Phone?

Yes. Existing Australian phone numbers — including geographic numbers, 1300 numbers, and 1800 numbers — can be ported to Microsoft Teams Phone. The porting process is managed through your Microsoft partner or, for Direct Routing deployments, coordinated with your existing Australian carrier. During the porting process, your current numbers remain active so there is no gap in service. Porting timelines vary depending on your carrier and number type, and your implementation partner will manage this process as part of the deployment.

Does Microsoft Teams Phone support emergency calling (000) in Australia?

Yes, but it requires specific configuration that must be completed as part of the deployment — it is not automatic. Emergency calling in Teams Phone depends on location data being correctly associated with each user so that 000 calls can route to the appropriate emergency service for the user's physical location. This configuration must be tested before the system goes live, and for businesses with staff in multiple locations, each location needs its own emergency address configured. An experienced Microsoft partner will address this as a standard part of the implementation checklist.

What licences does my business need for Microsoft Teams Phone in Australia?

You need a base Microsoft 365 licence (Business Basic, Business Standard, Business Premium, E1, E3, or E5 are the most common for Australian SMBs), a Teams Phone add-on licence, and either a Microsoft Calling Plan (where Microsoft is your telco) or a Direct Routing arrangement with an Australian carrier. Licence requirements vary based on your calling volumes, whether you need international calling, and your preferred connectivity model. Your Microsoft CSP or a qualified Australian Microsoft partner can map the right combination for your specific situation and confirm what may already be included in your current subscription.

To find out how Microsoft Teams Phone can benefit your business, talk to the Tyto team on 1300 070 565 or visit tyto.net.au