The system cannot 'phone partner &1 (function &2)

What causes this issue?

The partner that you want to call does not have an address in central
address management format, needed in order to use SAPphone.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.