
If you have upgraded your Skype for Business users to Teams and want to update the Teams co-existence mode to “Teams Only” so that users can only use Teams but still join meetings hosted in Skype for Business. The Coexistence mode that is used determines both routing of incoming calls and chats and the app that is used by the user to initiate chats and calls or to schedule meetings.
To change the coexistence mode. Open Teams Admin Portal -> Teams -> Teams upgrade settings

You will get below options for Coexisting setting:
- Island: Users can use both the Skype for Business and Teams apps.
- Skype for Business only: Users receive chats and calls and schedule meetings in Skype for Business.
- Skype for Business with Teams collaboration: Users receive chats and calls and schedule meetings in Sky for Business, but use Teams for group collaboration.
- Skype for Business with Teams collaboration and meetings: Users receive chats and calls and schedule meetings in Sky for Business but use Teams for group collaboration and meeting scheduling.
- Teams Only: Users configured in this mode use Teams as their only communication and collaboration tool.

Change the co-existence mode to “Teams only”. You may get below error as we see in the below screenshot. There is not much information on this portal to troubleshoot this issue. However, we will try using powershell to set the co-existence mode to “Teams only” mode to see if we get more information on the console.
Also Read: External Users / Guests are able to bypass lobby – Microsoft Teams meeting

Using Powershell command provides more information about the issue:
Grant-CsTeamsupgradePolicy -PolicyName UpgradeToTeams

To check if any one is set to Skype for Business only, you should check using below command and make sure no one is set to Skype for Business only mode.
Get-CsOnlineUser | FT userprincipalname,TeamsUpgradeEffectiveMode
To Fix this issue, Create below two highlighted CNAME records
in your Public DNS Management Console. Try again after few hours.
DNS Records:

Example:

Now, we should be able to change the Coexistence mode to “Teams Only”.

External References:
Install Teams Powershell module
Set your coexistence and upgrade settings
Thanks for the detailed explanation Jatin