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Ola eyes Australia, New Zealand for expansion

January 11, 2018 03:59 IST

The two new markets are overwhelmingly dominated by US ride-hailing giant Uber, which has been able to edge out local start-ups

Homegrown cab aggregator Ola is planning to set up operations in Australia and New Zealand as it looks to explore new avenues for growth and play a part in investor Didi Chuxing’s plans to dominate the global ride-hailing ecosystem.

 

The Indian firm has set up teams in Dhaka and Colombo, setting the stage for its first overseas expansion.

As the company looks for new and larger markets to enter, Australia and New Zealand have firmly shown up on its radar, according to people familiar with the development.

The two new markets are overwhelmingly dominated by US ride-hailing giant Uber, which has been able to edge out local start-ups such as GoCatch.

Currently, Uber has a presence in 23 cities in Australia and New Zealand.

Uber has also been present in both Dhaka and Colombo for a while now, with Ola’s entry giving the first serious competition to the US firm.

When Business Standard sought comment from Ola on its Australia and New Zealand plans, the firm termed them as speculative.

“We are committed to our mission of building mobility for a billion people,” said a statement quoting an unnamed spokesperson.

Ola CEO Bhavish Aggarwal had met London Mayor Sadiq Khan during his visit to India in December, signalling that the firm was interested in taking its business overseas.

However, a source told Business Standard that entering a market like London was off the charts, given its size and how deeply entrenched Uber already was.

“You need deep pockets to enter London. The money can as well be used to go into other markets,” said the person who did not want to be named.

Australia and New Zealand are far more feasible markets for Ola to enter.

Despite Uber’s wide coverage, there continues to be space to grow as cities outside Sydney and Melbourne don’t really figure high on the radar for growth.

Australia is also a market that favours ride hailing since the government made ride sharing legal back in 2015.

Ola’s move to grow beyond the boundaries of India came around the time the company was closing a massive $1.1 billion funding round that was led by Tencent and SoftBank.

While Uber controls a 20 per cent stake in Didi through the sale of its China unit to the company, and the two now share a common investor SoftBank, the Chinese ride-hailing giant doesn’t seem to be giving up its global dreams.

Taxify, the Estonian counterpart of Ola also backed by Didi, marked its entry into the Australian market last month.

The company launched its service in Sydney and took a jab at Uber, saying its business model was based on “fairness and transparency”, helping it sign up 4,000 drivers in an extremely short span of time.

Earlier this month, Didi also made a strategic investment in 99 (formerly 99Taxis), Uber’s biggest rival in Brazil.

99 claims it is the market leader in Sao Paulo and Rio de Janeiro, much like how Ola claims it is the leader in India’s ride-hailing space.

The investment was seen as a sign that the truce between Didi and Uber was over.

Photograph: Shailesh Andrade/Reuters

Alnoor Peermohamed in Bengaluru
Source: