Several news sources are reporting that Japanese giant investor SoftBank Group is putting pressure on Indian ride-hailing company Ola to merge with American rival Uber as part of a consolidation plan in India which represent the fastest growing market for ride hailing. SoftBank is currently the largest investor in both the companies and are reported to have been holding talks for over a year concerning the merge.
The wish of Softbank to see the deal go through intensified after Uber decided to leave the ride-hailing market of Southeast Asia after admitting defeat to local competitor Grab last week. Reports suggest that the deal will be completed in the coming two months as both companies wish to have controlling stakes in the deal. This is the main reason why the deal is taking so long to go through but reports suggest that SoftBank is backing Ola in acquiring the Indian operation of Uber.
No Ola official agreed to give further details of this news and Ola has constantly been denying talks about a potential merge or acquisition between the two rival ride-hailing companies. However, one statement from the Indian firm did hint that Ola is constantly looking for new ways of expanding operations in India. . “In India’s transformative digital journey, Ola will always be an active and integral part for decades to come. SoftBank and all other investors are committed in realizing this ambition,” the company released in a statement. This clue might suggest that Ola is more inclined to follow SoftBank instructions.
But if Ola is indeed able to merge with Uber and acquire the major controlling stakes, it will mean the fourth large retreat for the US company worldwide; a big humiliation. Indeed, Uber has already sold its Chinese operations to local rival Didi, its operations in Russia have also been sold to Russian company Yandax. More recently, they ceased operating in Southeast Asia, losing ground to Grab. Uber CEO Dara Khosrowshahi did release a statement saying, “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.” Seemingly, from this statement, Uber has no intentions of admitting defeat in India’s market and sends a strong message to its investor, SoftBank.
Moreover, in an internal statement sent to employees, the CEO founder was quoted, “We’d, of course, look at any deals that can add value to our partners and shareholders, but we believe in controlling our own destiny in India.” Such statement only implies that Uber will not back down from operating in India.
The rivalry between Uber and Ola is known to be fierce. Market research shows that the difference in market share is insignificant and the two companies have never admitted losing ground to one another since Uber entered the Indian market. In fact, both companies claim leadership over the market share making it difficult to know which company is really the most utilized by Indians. This cause additional headache for their investor SoftBank and we can conclude that this is the major reason why none of the ride-hailing companies are ready to give up controlling stakes in a possible merge.
Finally, another hint of Uber’s intentions came after the company shared its desire of leveraging profits generated from their other overseas market to replenish its capital in India. Estimates reveal that the US company is currently fueling its Indian operations with $22-25 million monthly which is still nothing compared to the billions of dollars it invested in its Chinese and Southeast Asia operations before admitting defeat.