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Rumor: Uber Proposes to Merge with India’s Ola and to Lead the New Company

Written by Zhao Xiaochun Published on   3 mins read

SoftBank is the largest shareholder in both Uber and Ola.

History never stops repeating itself, neither does Uber.

Just last week, Uber announced to sell its Southeast Asia unit, including UberEats, to Singapore-based rival Grab, marking the third time the global ride-hailing giant ceding its territory to a local competitor.

And according to a recent Reuters report, Uber has been in talks with India’s Ola in regards to a potential sellout of its India business to Ola, which currently boasts of more than 56 percent of the ride-hailing market in India against Uber’s less than 40 percent.

Execs from Uber and Ola have met up at least twice over the past 12 months, according to the Reuters report. It was said that Uber proposed the merger and intended to take a controlling position in the new company.

The potential move contradicts what Dara said during his February visit to India earlier this year. In a visit to meet local team and government officials, Dara said: “India is a key component of our growth plan. In fact, it is one of our healthiest markets in terms of growth rates… We think, we can increase that by 5X or 10X over the next 10 years.” He also added that Uber is very confident about its competitive position in India.

With a $12 billion taxi market and a 1.3 billion population, India is one of Uber’s fastest growing market. In the country, Uber handles over 10 million trips a week, that’s over 10% of the company’s global trips.

Screenshot from Ola iOS App Store.

But when compared with Ola, Uber lags behind on several fronts. Firstly, Ola has a much larger business scale. According to Quartz, the Indian company operates in 110 cities while Uber 31. Ola has over 1 million drivers and Uber has 450k. Besides, Ola also leads the competition in terms of app installs, having a 12% higher app install rate than its US counterpart, according to a research by market intelligence firm KalaGato.

Ola holds a 56.2% market share in India in last December, up from 53% in July, while Uber is losing its battleground, seeing its market share dropped from 42% to 39.6% during the same period, according to KalaGato.

The success of Ola due in large part to the fact that the company knows better its home market. Ola accepts cash payment from the very beginning in the overwhelming cash-dependent economy and its app is more friendly to non-English-speaking drivers, giving nine regional language options.

Ubers Deja Vu

Uber’s lagging behind in India gives out a sense of Deja vu, just as the company trailed its local competitors in China and SEA, resulting in eventual unit sells to rival companies.

The hand pushing for the potential merger between Ola and Uber could be Masayoshi Son’s SoftBank, the world’s largest tech investor, which is the largest shareholder in both companies. In January this year, after becoming Uber’s largest shareholder through a 15% share purchase, head of SoftBank’s Vision Fund Rajeev Misra, has called Uber to focus on key markets in the U.S., Europe, Latin America and Australia, and India is not included. The Japanese conglomerate is also said to push for a merger between China’s Didi Chuxing and Uber.

Read more: Is SoftBank Really Orchestrating A Merger between Uber and Didi Chuxing?

Editor: Ben Jiang


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