The mouthpiece of a telephone handset converts sound energy into electrical energy. When you speak into the mouthpiece, your voice creates sound waves. These sound waves cause a small diaphragm in the mouthpiece to vibrate. This vibration is converted into an electrical signal that can be transmitted through the telephone line to the receiver at the other end.
In other words, the mouthpiece of a telephone handset works like a microphone, converting sound energy into an electrical signal that can be transmitted through the telephone system.