Uber chief executive Dara Khosrowshahi has said the taxi-hailing company is committed to investing further in the Indian market while keeping an eye on “eventual profitability”.
Khosrowshahi told PTI that India is among the top three markets (US and Latin America being the other two) for Uber and it accounts for 10% of all trips globally.
“I can tell you that India is a key component of our growth plan. In fact, it is one of our healthiest markets in terms of growth rates. We have over 300,000 active drivers and we currently do over 10 million weekly trips. We think, we can increase that by 5X or 10X over the next 10 years,” Khosrowshahi said.
While profitability remains a challenge, Uber has invested substantially in India. In 2015, the company announced an investment of $1 billion in the country to expand its services. It has also set up a response and support centre in Hyderabad with an investment of $50 million.
But the recent sale of it’s South East Asia business to Grab, which follows similar moves in Russia and China, has led to speculation of a potential merger between Uber and Ola in India. Softbank which is a key investor in Ola, picked up a 15% stake in Uber earlier this year.
Khosrowshahi was coy but not entirely dismissive when asked about a potential merger with its chief rival in India, he said the company will “look at any deals that can add value to its partners and shareholders, but we believe in controlling our own destiny in India”.
Apart from India, the two now also compete in the Australian market with Ola recently launching its services in Perth and Sydney.
Uber exits South East Asia
Last week it was reported that Uber has agreed to sell its South East Asian business to regional rival Grab. As part of the deal, Uber will get a 27.5% stake in Singapore-based Grab while Khosrowshahi will join Grab’s board.
The deal will see Grab — which is valued at over $6 billion — buy Uber’s ride-sharing business in eight countries in South East Asia. It will also take over UberEats, which is currently present in three markets, and expand that service across the region during the first half of this year.
The deal puts Grab in absolute control of South East Asia’s ride-sharing market, except Indonesia. Grab said that Uber’s ride-sharing app will be available for two more weeks, while UberEats will close down and migrate to GrabFood at the end of May.
This is the company’s second high profile exit from an Asian market, in August 2016 the company sold its Chinese operations to local rival Didi Chuxing. As part of the deal, Uber acquired 5.89% of the combined company while Didi obtained a minority equity interest in Uber.
Following the announcement of the deal with Grab, Khosrowshahi told his employees that there will be no more exits under his leadership. He said,
“It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.
One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”
Softbank and Uber
In December last year, SoftBank and its co-investors acquired 18% stake in Uber. As part of the deal, SoftBank got 15% percent of Uber’s shares, while other co-investors got just under 3% of the company. SoftBank and others also agreed to infuse $1.25 billion into the cab aggregator in new investment as part of the transaction.
The taxi-hailing company was valued at around $68.5 billion in 2016, but it dropped down to $48 billion in the SoftBank deal. There were multiple reasons attributed to the large slump in value. The ride-hailing company was plagued by a string of scandals, lawsuits, bans and fights throughout 2017.