What Teams Phone license do I need?

A Teams Phone deployment is a stack of licenses rather than a single purchase, and the phrase Teams Phone license refers to just one layer of that stack.[2][5] Microsoft builds business calling on top of the Microsoft 365 subscription your users already hold, so the question of what you need usually comes down to which layers you are missing rather than starting from nothing.[2][8]

The three layers you are licensing

The first layer is a base Microsoft 365, Office 365, or standalone Teams subscription, because a Teams Phone add-on cannot be assigned to a user who has no Teams license underneath it.[2][3] The second layer is the Teams Phone entitlement itself, which Microsoft records as the Microsoft 365 Phone System application and sells either as the Teams Phone Standard add-on or bundled into higher plans.[2] The third layer is a connection to the public switched telephone network, the PSTN, which supplies real phone numbers and the route to domestic, international, and emergency calling.[5][6]

Why the license and the phone line are sold separately

Microsoft keeps the Teams Phone license and the PSTN connection as two distinct decisions on purpose. The license entitles a user to the enhanced calling and PBX features and to access a PSTN solution, while the PSTN solution is what actually carries a call to an outside number.[5][6] Because of that split, a Teams Phone license by itself lets people call other Teams users and use features like voicemail and auto attendants, yet it cannot reach a landline or mobile number until a PSTN option is attached.[5][9] Calls that stay between Teams users inside your organization travel over the internet and never touch the phone network, which is why those internal calls carry no carrier charge.[5]

If your users are on Microsoft 365 E5 or Office 365 E5, they already hold the Microsoft 365 Phone System application, so you do not buy a separate Teams Phone Standard license for them.[2][8] Microsoft's licensing documentation lists a legacy Microsoft 365 E5 license, and a Microsoft 365 E5 (no Teams) license paired with a Teams Enterprise license, as combinations that already grant Teams Phone.[2] What an E5 user still needs is a PSTN connection, because the included Phone System entitlement covers the PBX features and internal calling but not the outside line.[2][9] For a company standardizing on E5, the remaining Teams Phone decision is usually which PSTN option to attach, whether a Microsoft Calling Plan or a third-party carrier through Operator Connect or Direct Routing.[6] Checking existing license assignments before you buy anything is worth the few minutes, since paying again for a Phone System entitlement that E5 already covers is a common and avoidable overspend.[2][8]

Teams Phone Standard is the add-on you buy when your base plan does not already include the Phone System application, which covers most Microsoft 365 E1, E3, Business Basic, Business Standard, and Business Premium subscriptions.[1][2] It provides the hosted PBX capabilities Microsoft associates with a phone system, including cloud voicemail, call forwarding, call transfer, auto attendants, call queues, and caller ID, and Microsoft lists it at $10.00 per user per month on an annual commitment.[1][3] Independent pricing guides current to 2026 quote the same $10 figure, and both Microsoft and those guides are explicit that the Standard license includes no outbound minutes and needs a separate PSTN option.[3][7][9] Each variation of the Standard license carries a prerequisite base license, so a tenant buys Teams Phone Standard on top of an existing E3 or Business plan rather than on its own.[2] This path suits organizations that want to choose their own carrier or keep an existing telephony contract, because it separates the license decision from the PSTN decision instead of bundling them.[1][6]

The Teams Phone with Calling Plan bundle combines the Teams Phone license and a Microsoft Calling Plan in a single SKU, making Microsoft both your phone system and your PSTN carrier.[1][4] Microsoft lists two common variants for US users: a domestic bundle at about $17.00 per user per month that includes 3,000 outbound domestic minutes for the US, UK, and Canada, and a pay-as-you-go bundle at about $13.00 per user per month that adds a phone number with metered outbound minutes billed by usage.[3][4] Minutes from identical domestic plans pool at the tenant level, so 100 US users each allotted 3,000 minutes share a single pool of 300,000 minutes, and calls beyond the pool bill per minute.[4] Incoming minutes are unlimited on these plans.[4] This bundle tends to fit teams that want a single vendor and the least setup, with Microsoft handling both the phone system and the dial tone, and Microsoft's own guidance is to consider it when a Calling Plan is sold in your region and you do not already hold an E5 license that includes Phone System.[2][4] Where calling needs are more complex or a Calling Plan is not sold locally, the separate Standard license plus a third-party PSTN option is the more flexible route.[2][6]

Whichever Teams Phone license you land on, external calling requires a second choice: a PSTN connection, and only one of the four options carries its own Microsoft license.[6] Microsoft states plainly that a user account must be licensed with the Teams Phone application and also be equipped with a PSTN solution before it can make and receive telephone calls.[6] A tenant can also combine options, for example a Calling Plan in one country and Direct Routing in another.[6]

Microsoft Calling Plan

A Microsoft Calling Plan is the only PSTN option that needs its own add-on license beyond Teams Phone, because Microsoft becomes your carrier and supplies the numbers and minutes.[4][6] You buy a Calling Plan license, in domestic, international, or pay-as-you-go form, per user, or you buy the Teams Phone with Calling Plan bundle that folds both together.[1][4]

Operator Connect

Operator Connect lets a certified third-party landline operator provide the PSTN service while you assign their numbers and policies in the Teams admin center.[6][10] It requires a Teams Phone license plus a contract with the operator, and Microsoft does not charge a separate PSTN license because the calling cost comes from that operator.[2][6]

Teams Phone Mobile

Teams Phone Mobile ties a SIM-enabled mobile number to a user's Teams identity through a certified mobile operator, so one number rings on the cell network and inside Teams.[6] As with Operator Connect, it needs a Teams Phone license plus a contract with the participating operator rather than a separate Microsoft PSTN license.[2][6]

Direct Routing

Direct Routing connects a carrier of your choice through a certified session border controller that you or a provider manages, and it works in any country.[6] It also needs only a Teams Phone license on the Microsoft side, with the PSTN cost and the SBC handled by you and your operator.[2][6]

Several situations use a different license than the standard per-user Teams Phone add-on, and picking the right one avoids paying for entitlements a device or role does not need.[1][2]

Frontline workers

Frontline staff on Microsoft 365 F1 or F3, or Office 365 F3, use a Teams Phone Standard for Frontline Workers license rather than the regular Standard add-on, and the tenant must hold the matching frontline base license.[1][2] Microsoft restricts frontline licenses to users who meet its frontline criteria, such as sharing a primary work device or using a device with a screen smaller than 10.9 inches.[1]

Shared and common area phones

A phone in a lobby, break room, or warehouse that many people use is licensed with a Microsoft Teams Shared Space license, which Microsoft renamed from Teams Shared Devices in 2026 and which already includes the Phone System application.[1][2] A Teams Rooms Pro license similarly includes Phone System for meeting-room hardware, so you do not add a separate Teams Phone license to those accounts.[1][2]

Auto attendants and call queues

The automated menus and hold queues that route a main business line run on resource accounts, not on a person's license, and each uses a Microsoft Teams Phone Resource Account license.[2] You still attach a PSTN number, and where a Microsoft service number is used, a pay-as-you-go calling plan license, to the resource account.[2][4]

Shared Calling

Shared Calling lets many users make and receive outbound PSTN calls through the number of a single resource account, so those users need only a Teams Phone license and no dedicated number or personal calling plan.[2] The resource account holds the number and, if it uses a Microsoft service number, a pay-as-you-go calling plan license.[2][4]

The license is only part of the monthly cost, and a few details decide whether your first estimate holds up.

The license is not the whole bill

A Teams Phone Standard license cannot call the outside world on its own, so the real per-user cost includes a PSTN option on top, whether that is a Microsoft Calling Plan, an Operator Connect subscription, or the SBC and carrier contract behind Direct Routing.[3][6] Budgeting for the license alone understates what a working deployment costs.[7][9]

Calling Plan coverage is uneven

Microsoft Calling Plans and the bundle are sold only in certain countries, so an organization with offices outside that list often mixes connectivity types by region and cannot rely on a single all-Microsoft setup everywhere.[4][6]

Watch the base-license change from 2024

Since April 1, 2024, new enterprise customers buy Teams separately from the Office and Microsoft 365 E1, E3, and E5 suites, so a Teams Phone add-on now sits on top of both a suite and a standalone Teams license for those customers.[1] Organizations that held a Teams-inclusive suite before that date can keep renewing it.[1]

Confirm what E5 already covers

Because E5 includes Phone System, the most common avoidable cost is buying Teams Phone Standard for users who already have it, and a quick license audit settles it.[2][8]

A Teams Phone license is the calling entitlement inside Microsoft 365, not a phone line, a dial tone, or a meetings feature, and a few common mix-ups are worth clearing up.

It is not a Calling Plan

A Microsoft Calling Plan is one way to add PSTN service to Teams Phone, not another name for the license. You can run Teams Phone with Operator Connect, Teams Phone Mobile, or Direct Routing and never buy a Microsoft Calling Plan.[2][6]

It is not Audio Conferencing

Audio Conferencing lets people dial in to a Teams meeting by phone, and Microsoft states it does not require a Teams Phone license. The two are separate add-ons that solve different problems.[1]

It is not basic Teams calling

Every Teams user can already call another Teams user over the internet without any Teams Phone license.[5] The Teams Phone license is the separate piece that adds PBX features and, with a PSTN option, the ability to dial real phone numbers.[5][9]

It is not billed as one flat number

The advertised $10, $13, or $17 figures cover the license or the license-plus-minutes layer, not the base subscription underneath, so the true per-user cost is the sum of the layers a given user needs.[3][7]