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Is Softbank again pushing both ola and uber for a merger?

The matter of India’s two biggest online transportation network companies OLA and uber were in a talk for a possible merger was revealed recently. Four years ago, both companies talked about the merger, where common investor SoftBank had pushed for a merger, but the deal wasn’t successful back then.

Amidst the big reveal, the CEO of Ola, Bhavish Aggarwal denied the media reports about the merger and tweeted, “Absolute rubbish. We’re very profitable and growing well. If some other companies want to exit their business from India, they are welcome too! We will never merge.” This bold reply from the CEO led us to dig up on the profitability matter of both the companies.

Ola, formerly known as Ola Cabs, was founded by two IIT Bombay graduates in December 2010. Instead of buying and renting cars, the company partners with the drivers and owners of taxis and adds a modern touch to the whole process. It has users in over 250 cities in India. Ola have about 28 million weekly bookings, and it serves over 200 million customers through a network of 2.5 million drivers including two, three, and four wheelers, In 2009, Uber was founded as Ubercab by Garret Camp, a computer programmer and the co-founder of StumbleUpon, and Travis Kalanick,  currently operates in 58 cities in India with an over 14 million rides weekly with 93 million customers on monthly basis.

Uber and Ola are distinguished from one another by the services that each company offers. Uber offers a variety of services, including delivery of packages, meals, courier, and freight, as well as hire vehicles. On the other hand, in addition to renting out automobiles, Ola offers services like food delivery, mobile payment, merchandising, and digital wallets.

Even though there’s no merger happening for both the companies, if it ever happened it would be highly profitable for them both, because the companies have different services and when merged, it will only expand the business.  The best course of action to minimize competition in a market like India appears to be a merger. The combined company’s revenue would benefit from the merger.

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