A telephone number is a string, not a number and you shouldn't try formatting it as one. Technically, you could do:
<xsl:value-of select="translate(format-number(., '#,###'), ',', ' ' )" />
to achieve the desired result in your example. However, given a "number" such as "057342137" the result will be "57 342 137" (leading zeros stripped). You should be using string functions to manipulate a string.