An investment of more than $150 million will be made by United States based Uber Technologies in a joint venture and partnership with the South Korean firm SK Telecom Co Ltd. This move is viewed by analysts as a part of the US firm’s strategy of expanding into the South Korean market where its growth has been stunted by very strong competition.
SK Telecom is also put forward a proposal to split off its mobility business.
In the South Korean market, Uber has also faced opposition from taxi drivers and regulations to the extent that the ride hailing company was forced to stop the use of private cars for its ride hailing business in 2015.
In the South Korean market, premium taxi-hailing and registered taxi-hailing services are currently offered by the US ride hailing company. The market is dominated by the local player Kakao’s mobility unit.
Uber and SK Telecom said in a joint statement on the partnership that the new joint venture would “create opportunities in the taxi-hailing market in Korea and explore new areas, including future mobility services”.
He mobility services of SK Telecom would be split off, according to the plans of the two companies, which would include its satellite navigation and taxi-hailing, into a new company which would be called T Map Mobility. It is this new company where Uber would be making a direct investment of $50 million while another $100 million would be made by it in a joint venture structure, said the two companies in the statement.
The two companies said in the statement that the joint venture is expected to begin operations in the first half of 2021subject to regulatory approval.
The two companies further said that T Map Mobility’s “network of drivers and mapping technology with Uber’s ride-hailing technology and global operations expertise” would be combined under the new joint venture.
A new co-branded platform is expected to be launched by the two companies and would urge the riders and drivers using the T Map Taxi to consider joining the platform after its launch.
With a total average of about 750,000 monthly active users, the T Map Taxi is the taxi hailing platform of SK Telecom which is the second largest platform in Korea after Kakao. The company’s T Map satellite navigation platform is Korea’s largest with 13 million monthly active users.
51 per cent of the joint venture will be owned by Uber while the rest 49 per cent will be owned by T Map Mobility.
The current valuation of T Map Mobility is about 1 trillion won ($873.3 million) and
SK Telecom expects that it will grow in value to reach a valuation of 4.5 trillion won by 2025, the company said.
(Adapted from News18.com)