Uber: Expands in Africa, South America – but haemorrhaging money

Uber: Expands in Africa, South America – but haemorrhaging money

Frictionless transport company Uber has announced plans to expand its ride-hailing service to two more East African countries before the end of the year, via its Chap Chap business, which currently operates in Kenya.

Uber piloted the low-cost service in Kenya’s capital, Nairobi, and now operates 400 fuel-efficient Suzuki Altos in the city.

In Kenya, Uber competes with Taxify, Little, and Mondo Ride, and operates in partnership with local telco, Safaricom. Further details of the East Africa expansion scheme have not been provided.

Meanwhile in Nigeria, public support for Uber’s ride-hailing service is rising, with the company reporting monthly passenger numbers of 267,000 this week.

In the Middle East, Uber has been in talks with local rival Careem to combine ride-hailing services in the region, in the run-up to Uber’s planned IPO next year. 

However, news earlier this year that market regulators in Singapore are acting against its merger with local rival Grab may damage the prospects of further deals that reduce regional competition.

Safety first

Uber has also announced that it is opening a $64 million safety technology centre in Sao Paulo, Brazil, to develop systems to improve rider and driver safety in South America.

Uber’s app provides more rides in the city than anywhere else in the world.

The office will open this year and the investment will unfold over a five-year period, said the company.

Losses ramp up

Despite the positive news, Uber this week reported a Q2 adjusted EBITDA loss of $404 million – an increase of 31 percent on the previous quarter, and up on the same period last year. Revenues were up 49 percent.

Sequential losses have persuaded some Uber investors to call for the sell-off of its self-driving car unit, which has contributed 15-30 percent of the company’s total losses each quarter.

The company announced in July that it was closing its driverless truck division to focus on cars. It also trailed a possible tie-up with autonomous tech rival, Waymo.

Investors are worried that the planned IPO may be damaged by rising losses, especially those spurred by a division that will have to fund expensive technology development for many years to come, against rivals such as GM, Ford, Tesla, and Waymo.

Internet of Business says

Earlier this year, Uber repositioned itself as an Amazon-style hub for all forms of connected transport, from ride-hailing and electric bike hire to public transport ticketing.

The company is also developing a pilotless air taxi concept.

However, whether the company can sustain a focused global business in connecting users with frictionless transport while at the same time pouring money into developing autonomous vehicles must be in doubt, if investors withdraw their backing.

Public support for driverless cars has fallen in the US, in the wake of Uber’s fatal crash in March and the Tesla accident just days later, in which a driver died while his vehicle was running under software control.