PTA Moves to Regulate Corporate SMS Market, Offering Potential Cost Relief for Banks and Fintechs

The Pakistan Telecommunication Authority (PTA) has proposed declaring Corporate SMS a separate telecommunications market, a move that could potentially reduce messaging costs for banks, fintech companies, and large enterprises while increasing regulatory oversight of mobile network operators.

The proposal comes amid growing concerns from financial institutions and businesses over the rising cost of Corporate SMS services, which are widely used for one-time passwords (OTPs), transaction alerts, account notifications, marketing campaigns, and other customer communications.

In a consultation paper issued by the regulator, PTA said Corporate SMS has evolved into a distinct market with unique characteristics that justify a separate regulatory assessment. The authority noted that concerns surrounding pricing, affordability, and competition have prompted a closer examination of the sector.

Banks and digital financial service providers are among the largest users of corporate SMS in Pakistan, relying heavily on text messages for customer authentication, security verification, and transaction-related alerts. Industry stakeholders have argued that increasing SMS charges have raised operational costs despite messages being delivered through the same network infrastructure used for standard SMS services.

PTA’s preliminary assessment found that alternative communication channels such as WhatsApp Business, email, and mobile application notifications cannot fully replace SMS services. Unlike internet-based platforms, SMS remains accessible to virtually all mobile subscribers regardless of smartphone ownership, internet connectivity, or application installation.

The regulator also highlighted that many organizations have integrated SMS gateways directly into their operational systems, making it difficult and costly to switch to alternative communication methods.

On the supply side, PTA noted that enterprise messaging providers and SMS aggregators remain dependent on Cellular Mobile Operators (CMOs) for the final delivery of messages to subscribers. Since operators control access to their own customer base, third-party providers cannot independently terminate SMS traffic without commercial agreements with the relevant network operator.

As part of its market review, PTA has proposed designating all mobile operators as entities with Significant Market Power (SMP) in the Corporate SMS termination segment.

Under telecom regulations, operators are generally considered to possess SMP when they control more than 25 percent of a market. However, PTA argues that Corporate SMS termination represents a unique case because each operator exercises exclusive control over message delivery to subscribers on its own network.

The authority, therefore, considers every operator to effectively hold a “termination monopoly” for Corporate SMS traffic directed to its customers.

To support the review, PTA has directed mobile operators to submit audit-certified data covering the period from January 2023 to December 2025. The information requested includes average Corporate SMS rates and revenue generated from banking transactional messages, banking promotional campaigns, and messaging services provided to other industries.

Industry observers believe the consultation could eventually lead to greater transparency in Corporate SMS pricing and possible regulatory intervention in tariff structures and wholesale access arrangements.

If implemented, the proposed framework may help lower communication costs for banks, fintech companies, and enterprise customers while promoting competition and improving efficiency in Pakistan’s growing digital services ecosystem.

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