Microsoft Teams Phone System | What Is Included with 365?

That gap catches a lot of UK businesses out. They assume the phone system rides along with their existing 365 subscription, then discover at deployment that the licensing — and the calling minutes — are separate line items. If you run a UK SME, the first step is to map what your current business VoIP licences actually cover before you cost anything.

What Is the Microsoft Teams Phone System?

Teams Phone — also called Microsoft Phone System — is the cloud PBX (Private Branch Exchange) layer built into Microsoft Teams. It turns Teams from a meetings-and-chat tool into a full business phone system: external PSTN calling, auto-attendant, call queues, voicemail, and call routing, all inside the app your staff already use every day.

Because it runs in the same client as chat and meetings, there is no separate desk-phone software to manage. Microsoft documents Teams Phone as the component that "gives users phone-system capabilities" on top of Teams (learn.microsoft.com). What it does *not* do on its own is connect to the public phone network — that needs a calling plan or Microsoft Teams Direct Routing.

Which Microsoft 365 Plans Include Teams Phone?

Only the enterprise E5 tiers include Teams Phone at no additional licence cost. Every other business and enterprise plan — Business Basic, Business Standard, Business Premium, E1, and E3 — requires a separate Teams Phone add-on licence to switch the phone-system features on. Here is how the common UK plans line up.

Microsoft 365 Business plan list prices above are canonical and confirmed on microsoft.com/en-gb. Note that none of the Business-tier prices include telephony — they buy you the productivity apps and Teams collaboration, not the phone system.

The legacy Microsoft 365 Business Voice bundle once packaged Phone System with a calling plan for SMEs, but Microsoft retired it in favour of the standalone Teams Phone add-on plus calling-plan model. If you are still on Business Voice, plan a migration before renewal.

What Does the Teams Phone Add-On Actually Include?

The Teams Phone licence enables the call-management features of a business phone system — but not the phone numbers or the minutes. It is the PBX brain, not the line. You bolt connectivity on separately through a calling plan, Operator Connect, or Direct Routing.

The add-on switches on:

• External PSTN calling capability (connectivity supplied separately)
• Auto-attendant — unlimited, configured in Teams Admin Centre
• Call queues (up to 200 agents per queue)
• Cloud voicemail with transcription
• Call forwarding, transfer, and park
• Call hold with custom music
• Caller ID management
• Call analytics via Teams Admin Centre
• Teams-certified IP phone support

What Is Not Included in the Teams Phone Licence?

Four things routinely surprise buyers because they sit outside the base licence:

• Phone numbers: not included — acquired through Microsoft Calling Plans or ported via Direct Routing/Operator Connect.
• Call minutes: not included — calling plans or SIP trunks supply outbound minutes.
• Call recording: not in base Teams Phone — needs Teams Premium (approximately £6–£7/user/month, market rates as of 2026) or a compliance-recording partner.
• Contact centre: advanced queueing and agent features need a certified CCaaS product layered on top.

How Do You Connect Teams Phone to the Outside World?

Teams Phone needs a PSTN connection to call external numbers, and there are three routes. The right one depends on your call volumes, whether you want to keep an existing carrier, and how much infrastructure you want to manage. For most UK SMEs, Microsoft Calling Plans are the simplest start.

Microsoft Calling Plans

Microsoft supplies the UK phone number and inclusive minutes directly, all managed through the admin portal. Domestic plans cost approximately £5–£9/user/month and suit most SMEs that want one bill and zero extra hardware.

Operator Connect

A Microsoft-certified carrier connects its SIP network straight into Teams through Microsoft's cloud. You keep carrier choice and pricing without running your own session border controller (SBC). Available from carriers including BT and Gamma.

Direct Routing

A third-party certified SBC links Teams Phone to an external SIP trunk. It gives maximum flexibility on carrier and call rates and is usually most cost-effective for higher call volumes or existing SIP contracts — at the cost of running extra infrastructure. See Microsoft Teams calling for how the calling layer is deployed.

What Does Teams Phone Cost in Total?

For a typical SME user already on Microsoft 365 Business Premium with no phone system yet, telephony is the sum of three parts: the subscription you already pay for, the Teams Phone add-on, and a calling plan. The connectivity choice is where most of the variation sits.

• Microsoft 365 Business Premium: already included in your subscription (£16.90/user/mo list, microsoft.com/en-gb)
• Teams Phone add-on: approximately £6–£12/user/month
• Microsoft Calling Plan (domestic): approximately £5–£9/user/month
• Total telephony cost: approximately £11–£21/user/month (typical UK 2026 range)

That puts Teams Phone broadly in line with dedicated hosted phone systems at £8–£25/user/month, and the integration — calls, meetings, and chat in one app — is value a pure price comparison misses. If your team already lives in Teams, the case is strong. AMVIA delivers Teams Phone as a fully managed service: licensing assessment, calling-plan selection, number porting, and full configuration, so you get one accountable provider rather than a stack of separate contracts. See VoIP for Microsoft 365 for how the calling layer fits the wider 365 estate.

Is Teams Phone Worth It Over a Traditional Phone System?

For most UK SMEs already standardised on Microsoft 365, yes — provided you size the licensing correctly. Teams Phone removes the on-premises PBX, consolidates vendors, and rides the same security and identity controls as the rest of your 365 tenant. The catch is that the PSTN is being switched off, so legacy systems are on borrowed time anyway.

Openreach is withdrawing the traditional analogue and ISDN network, with the all-IP migration scheduled to complete by the end of January 2027 (ofcom.org.uk). Any business still on ISDN needs a cloud calling plan regardless — so for Microsoft houses, Teams Phone is often the path of least resistance. Locking down those calling identities also matters: tie it to your Microsoft 365 security baseline so call accounts are covered by the same conditional-access and MFA policies.