There are many directories in the phone network, both local to your nearest tower, right up to every SIM card the network manages across the world. Your phone places a call, asking the tower to find your friends phone, then it simply starts querying directories starting with its own local cell, and moves up to larger cells/providers until it finds a match.
All phones are constantly checking in, updating the network about which tower they are closest to (even when roaming) so when a call is placed, the network knows how to route it to you.
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