Help with hybrid-joined user accounts with external emails and Teams chat

Hey Everyone, 

I have a somewhat complicated issue using Teams with external user accounts. Hoping someone here can help. I work for a company that is hybrid Azure/Entra joined. We have some external vendors that have on-prem Active Directory accounts that sync to our Azure/Entra tenant. Rather than use an email address associated with our company domain, these vendors come into our tenant using their company email addresses instead. We were able to achieve this through the following steps:

1. When we create the on-prem AD account, we specify their company email address in the “E-mail” attribute field.
2. We wait for the on-prem AD account to sync to our Azure/Entra tenant.
3. After the account appears in Azure AD, we use the B2B invitation link to invite them as a guest.
4. They accept the invitation and are then able to use their company email address when they sign into our tenant.

Recently, we have noticed that we are unable to create a group chat in Teams for users set up in this manner. We can chat in Teams 1-on-1 with these users, but if we hit the button to add another user set up in this manner, it does not work. I have noticed that the username when chatting with one of these users 1-on-1 says “EXTERNAL” beside it, but when I try to add one of the other users set up in this manner to a chat, it does not say “EXTERNAL”, and they have a greyed-out X beside their name as well.

I’ve also noticed the Azure/Entra properties for these users shows that the User principal name (UPN) for their hybrid account still shows our company domain (Example - email address removed for privacy reasons) while the email field shows their company email address (Example - email address removed for privacy reasons). Could this somehow be to blame for this issue?