India’s top two cab aggregator services – Ola and Uber – are reportedly in talks for merger and the deal is apparently being brokered by Japanese investment giant Softbank. It is reliably learnt that the talks have been on for some time and is spearheaded by Softbank, and not the cab aggregators, that has substantial investments in both the companies.
When contacted by IndianExpress.com, both, Uber India and Ola, denied any that any merger talks were underway.
However, sources in the know of the developments suggested that any such merger will only happen if Uber holds a majority stake in the merged entity.
Uber-Ola Merger talks surface after South Asia deal
Interestintgly, these merger talks come two days after Uber Inc agreed to sell its Southeast Asian operations to rival Grab for a 27.5 per cent stake in that company. Uber had operations in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Uber CEO Dara Khosrowshahi will have a seat in the boardroom. In October last year, Uber ended operations in China, selling its service to Didi Chuxing.
When asked what implications the Grab deal will have on its India operations, Khosrowshahi said the company (Uber) will invest “whatever we have to in order to succeed in India”.
“The great news about our Grab deal is that it allows us to double down to invest aggressively in our core markets – and we consider India very much as core to Uber’s success… we will be more focused on organic growth in the markets that we are operating in,” Khosrowshahi told PTI.
Khosrowshahi maintains that India is among its top three markets after US and Latin America and it accounts for 10 per cent of its global trips. In 2017, Uber provided four billion rides worldwide.
Softbank investments in Ola, Uber
In October last year, Ola secured $2 billion in new funding from a group of investors including SoftBank and Tencent Holdings Ltd, giving it the upperhand in the $10 billion industry, 90 per cent of which is controlled by Ola and Uber.
On its part, Uber sold a 15 per cent stake worth a total of $9 billion to Softbank, making the Japanese conglomorate its largest investor. The deal also includes a direct investment of $1.25 billion into Uber and resulted in Uber’s boardroom seeing an expansion with Softbank earning two seats.
On being asked if Softbank was now pushing the company to cut-back on the high cash burns, Khosrowshahi told PTI: “You have to take profits from developed markets and put them into growth markets such as India, the Middle East and even Africa and that is exactly what we intend to do. And believe me, Masa (SoftBank CEO) likes growth!”
Protests by cab owners
The two companies, however, have not had it easy in India. Over the past year, car owners who signed contracts with the two cab-hailing services, complained that their earnings were falling resulting in difficulties in paying back their loans.
Some drivers, part of taxi unions, demanded that drivers blacklisted for various reasons be allowed to resume services.
Uber entered India in 2013, three years after Ola began its operations. Ola provides its cab hailing services in 110 cities across India, while Uber is operational in just 29. Colombo and Dhaka are also part of its India operations, taking the number to 31. Ola has 800,000 cars with 900,000 registered drives as of January, 2018. Uber India has 4,50,000 drivers in India.