When transferring with Teams, Teams likes to default by transferring to a Teams email address rather than an extension. To transfer a call to a physical handset please follow these instructions.
Click Transfer.
Click Consult then transfer.
Enter the extension number to transfer the call to. Make sure your enter a + in front of (this is a Teams requirement) You will get the number popup with external call, click this.
The call will now start to ring the extension.
Once you have announced the call to the extension user, click the transfer button that has the box around it.
Now click the leave button. The handset the call was transferred to will ring and the user will need to answer the call.