Yes, yi is pronounced as yao in a series of telephone numbers to avoid being confused with qi (which is seven).
And yi (one) is not the only number which has a new pronunciation. In the military in China, I believe 170 is pronounced as 一 yao, 七 guai, 零 0 dong.
Something similar happens in English. Don't native speakers of English read 5 0 9 as five "oh" nine instead of the more accurate "five zero nine"?
Ask any accountant how to pronounce "509," and most professionals would say "five zero nine" and not "five oh nine."
In all languages, there are variations in pronunciation due to location and profession. E.g., Houston, Texas versus Houston St (Howston St) in New York City.
你是谁？ "Ni shi shei?" versus "Ni shi shui?"
(usually in a small area in Northern China. Two of my acquaintances say "shui."
We learn more when we ask more questions such as
"Who says this?" "Under what circumstances" "How often?"
"Ya, understand where I am comin' from, eh?"
Language often indicates class, level of education, group association, etc.
Also, many people just speak a language without understanding the several messages that the words may give. If we change the tone of our voice or use sarcasm, we can change the meaning of the words.
This is what makes learning Chinese so exciting. Because the Chinese characters are ambiguous, and therefore the speaker can play with the meaning of the sound/character.
Also, because the pronunciation of a word can be interpreted in many ways, that may lead to confusion or more often a joke.