Gett CEO believes Yandex.Taxi-Uber merger might lead to price hikes

Paterniano Del Favero
Luglio 14, 2017

"Yandex in the near term "is likely to keep subsidizing rides in order to grow its market penetration (the combined share of Y.Taxi and Uber was below 10% in 2016)".

Last year, the San Francisco-based company sold its business to Didi Chuxing, an archrival in China and the largest ride-hailing service there. "Together with the $225 million cash investment we are making in the new company-our 36.6 percent ownership stake will be worth nearly $1.4 billion".

The new company, yet-to-be-named, will be worth $3.725 billion and span 127 cities in 6 countries (Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan).

Uber's food delivery business UberEats will also be operated by the new company.

Chief Executive Tigran Khudaverdyan will become the CEO of the combined business and Yandex will consolidate the new company's results in its financial statements. Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East and Africa, had this to say via Uber's blog post. Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. Uber's investors have been alarmed at the magnitude of losses in emerging markets like India and the exit from Russian Federation could be the start of a restructuring process that could see the company complete similar deals in the near future. The deal allowed Uber to keep its competitive foothold in China with its roughly 20 percent stake in Didi which Uber said has risen in value by $2 billion. That marks a sizeable gain on the $170 million Uber invested since entering the region three-and-a-half years ago, even with the new $225 million investment.

Dubbed the "Google of Russia", Yandex launched a taxi service in 2011 and has been Uber's biggest rival in the scramble for market share, Bloomberg reports.

Khudaverdyan said the deal should be closed in the fourth quarter following regulatory approvals.

Uber's loss before interest, taxes and stock-based compensation totalled US$708mil (RM3.03bil) in the first three months of the year, an improvement from the US$991mil (RM4.25bil) loss in the prior quarter.

The unified business in Russian Federation and surrounding markets also helps Uber become more sustainable, he said, by helping it cut losses as part of a global drive toward eventual profitability. Apps from both ride-hailing companies will continue to be offered, while the driver app will become a single platform. Losses narrowed further in the latest period, Uber recently told investors. Uber operates in almost 600 cities worldwide.

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