SAN FRANCISCO: Uber is in advanced discussions to sell its food-delivery business in India, according to two people with knowledge of the plans, as the company moves to stem its losses.
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The ride-hailing company is nearing a deal to sell its Uber Eats service in India to Zomato, an Indian food-delivery service, said the people, who spoke on the condition of anonymity because they were not authorised to do so publicly. The sale could be announced as early as this week, they said.
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A spokesman for Uber declined to comment. The talks were reported earlier by TechCrunch, which said a deal would value the India business of Uber Eats at $400 million (Dh1.4 billion).
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Dara Khosrowshahi, Uber’s chief executive, has been trying to pare back money-losing businesses to prove to investors that the company can turn a profit. Investors have agitated both in public and behind the scenes for Uber to clean up its balance sheet since it went public earlier this year.
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Uber’s initial public offering in May was a disappointment, with the company’s shares immediately plunging as investors questioned how much money the ride-hailing service loses. That event marked a turn in sentiment around high-profile-but-unprofitable tech start-ups, many of which had burned cash for years in the pursuit of growth. WeWork, another highly valued start-up, later shelved its plans for an IPO as private investors cut the company’s valuation to a fraction of its former worth.
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Investors have recently homed in on several issues at Uber, according to two people briefed on the conversations. Those include continued regulatory challenges around the world — most recently, transportation authorities said they would not extend Uber’s taxi license in London, one of its biggest markets — and ballooning expenditures.
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Some investors have privately grumbled that Uber also paid too much for Careem, a Dubai-based ride-hailing and delivery company that Uber announced this spring it would acquire for $3.1 billion.
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According to two people familiar with the matter, investors have also privately complained to Khosrowshahi about the expense of its Advanced Technologies Group, which develops self-driving vehicles. No decisions have been made about the unit, these people said, which has more than 1,000 full-time employees.
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While Uber Eats has been a bright spot for revenue growth, the company has offered subsidies and free promotional offerings to gain new users, a strategy that has been expensive. In a conference call with investors last month, Khosrowshahi said his plan for Uber Eats was to take first or second place in every city it operates.
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“If we can’t make it to that level, we’ll look to dispose or we’ll get out of the market,” he said at the time.
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In India particularly, Uber Eats has struggled to sign up restaurants, diners and delivery agents in a brutally competitive market where Zomato and other delivery start-ups like Swiggy are well established. Uber has had to offer heavy incentives to lure customers there.
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In September, Uber also announced that it was pulling its Eats business out of South Korea, where the company faced stiff competition from local start-ups.
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Khosrowshahi has previously retreated in ride-hailing in Southeast Asia, where the company faces difficulties competing. In 2017, under its chief executive at the time, Travis Kalanick, Uber pulled out of China, where the company was burning billions of dollars. That same year, Uber largely withdrew from Russia.
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The Morning and Evening Brief###
The Morning and Evening Brief