American online-cab service aggregator Uber has finally decided to withdraw from Southeast Asia, where it was bleeding money, which means, the company can now focus in India – where it is locked in a fierce competition with local cab giant Ola. A solution to that? Mega-merger.
Uber has had a major downfall in Southeast Asia and finally, it is decided to quit the region by selling its Southeast Asian operations to rival Grab for a 27.5 per cent stake in that company. Which means, the company has sold off its operations in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. However, the American cab aggregator is unlikely to give up in India, where it has locked a fierce business battle with Ola. When asked about the effect of Grab deal in India, Uber CEO Dara Khosrowshahi conveyed that the company will invest “whatever we have to in order to succeed in India.”
To succeed in India, Uber is planning for public offering in 2019 so that it can pitch India’s growth potential to investors. Looking deeper into the scenario, Ola and Uber, both are backed by a common investor – SoftBank, which is a Japanese investment company. It is believed that brokered by SoftBank two cab aggregators in India – Ola and Uber are discussing and planning out a mega-merger. So far, executives of Ola and Uber have met at least twice within 12 months – one of which was just weeks before Uber CEO Dara Khosrowshahi’s visit to India in February.
The mega merger makes sense for Uber in India as the company has been selling its market share to local competitors, which is part of their strategy to increase profits, and avoid ugly price wars. In China, they sold their unit to rival Didi, in Russia – they sold it to Yandex and recently, in Southeast Asia – they sold it to Grab. By selling off market share in India, Uber can focus on strengthening its core market in US and Europe without having to worry about other markets. For Ola, this makes sense because it would be a major consolidation in the online taxi industry in India, after TaxiForSure was acquired by Ola in 2015, for $200 million. As per reports, the announcement of mega merger can be made by June end this year.