India doom for Uber written in the (selfies with) stars

BOLLYWOOD actor Shah Rukh Khan is the new Taj Mahal. From Apple Inc to Google, when global CEOs want to showcase their commitment to the Indian market, they no longer look for photo-ops against the famous marble mausoleum of a long-dead emperor's wife. Instead, they take a selfie with India's reigning movie king.

Dara Khosrowshahi did just that last month on his maiden trip to Asia as Uber Technologies Inc's new chief executive officer.

Tellingly, Mr Khosrowshahi gave Singapore - Uber's regional headquarters - a miss on that visit, reinforcing speculation that the ride-hailing app would sell its South-east Asian business to Grab. The deal was announced on Monday. Grab is taking over Uber's operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. In exchange, Uber gets a 27.5 per cent stake in its closely held rival; Mr Khosrowshahi will join Grab's board.

Since the negotiations earlier this month were said to be for a stake in the high teens or 20 per cent, according to a Bloomberg News report, Uber appears to have done pretty well.

Still, the real victory unquestionably belongs to Masayoshi Son's SoftBank Group Corp, the single-biggest investor in both companies. As I wrote earlier this month, by engineering a retreat for the US company before any more bloodletting for market share, Mr Son ensures that six-year-old Grab will emerge as an early champion in a winner-takes-all business.

A faster path to profit for Uber could also boost its valuation ahead of a planned IPO next year. But at what cost? Having already surrendered China to Didi Chuxing, beating a retreat from South-east Asia is a precursor to perhaps losing India, the lone remaining jewel in Uber's once-flourishing Asian empire.

In India, once again, SoftBank is the largest investor in Uber's main rival, Ola. Competition between the two apps has become ridiculous. For all the PR gobbledygook on how happy Uber and Ola drivers are, the reality is that many who took out bank loans to acquire new cars are hurting badly. There's a glut of ride-hailing cars; wages have collapsed. Banks are collecting on "DUD", - my moniker for "distressed Uber debt" - by repossessing vehicles.

Ride-hailing drivers recently mobilised a strike using WhatsApp message groups. As they stayed home, Mumbai's traffic was blissfully light for at least two days last week. Such is the extent of oversupply. Mr Son will be doing disgruntled drivers a favour by taking Uber out of the equation so that Ola can raise prices. Resistance will be futile. Ola is expanding in Australia, and for now SoftBank hasn't stopped it from encroaching into Uber's territory. Maybe that will be a bargaining chip in peace talks, whenever they ensue.

Just as the fall of Singapore was the beginning of the end of Britain's sway in Asia, so will ceding the city make it very hard now for Uber to hold on to India, no matter who's in the selfies. BLOOMBERG GADFLY

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