If your application deals with SMS services and you want to test your app on Android Emulator then you can do it using DDMS Telephonic options.

Android Emulator Dummy SMS
Open DDMS Perspective : Windows ->Perspective -> Emulator Control -> Telephony Actions
Enter a dummy mobile number and message and click Send. And you would see that the SMS is received on your Emulator device.
You can even reply to the SMSes that you receive (yay! a dummy reply)

Dummy SMS received on Android Emulator
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