Uber and Ola merger could happen soon

The rivals could consolidate their India operations and merge soon, according to sources.

  • Published: March 29, 2018 12:06 PM IST

A merger between Uber and Ola in India could be on the cards, as the rivals in the Indian taxi aggregation space are said to be in talks for a possible merger. Japan’s Softbank, a common investor in both India-specific Ola and global taxi aggregator Uber, is said to be driving talks for a merger between the two companies in India. Softbank owns around 26 percent stake in Ola, and has a slightly lesser stake in Uber. The merger, if it goes through, will see Ola absorb Uber’s India operations.

The move is said to be driven by Softbank in order to avoid the drain of resources on both operations as a result of the fierce rivalry in India. The Japanese investment firm will benefit from the merger, as the single combined entity will continue to be controlled by Softbank while simultaneously ending the rivalry and stopping what can be considered a wasteful drain on resources. Ola is said to control well over half of the cab aggregation market in India, and would be the obvious dominant organization in any merger. In Uber’s case, only its Indian operations would be absorbed into the combined entity with Ola.

Sources that are aware of the developments have stated that senior executives of both companies have met many times in the past few months, presumably finalizing the terms of the merger. Uber recently sold its south-east Asia operations to its biggest rival in that market, Grab. Softbank, which recently invested in Uber, is concerned that the company is spending too much money in order to remain competitive with its rivals in major global markets outside of the US. Since Softbank has a large stake in Ola, it could use its control over the two firms to cause a consolidation.

The combined entity of Uber and Ola in India will control the vast majority of the cab aggregation market in India, with over 1 million vehicles registered with the fleet. Currently, Ola has 900,000 vehicles registered, while Uber has 350,000 vehicles. A key concern, if this merger were to go through, would be the elimination of competition between the two firms. Currently, customers are benefiting from the strong competition through reduced prices and numerous promotions and deals by both aggregators. A combined entity would not be concerned about competition, instead focusing on efficient operations. While this would no doubt be better for the business and the driver partners that work with Uber and Ola, customers stand to lose out a bit.

  • Published Date: March 29, 2018 12:06 PM IST