Uber is set to enter a new phase of international expansion targeting South Asia’s teeming megacities, launching initially in Sri Lanka and Pakistan as it moves to accelerate global growth and head off competitors.
The US-based ride-sharing group will start offering services in the Sri Lankan capital Colombo on Wednesday, followed by Lahore, Pakistan’s second most populous city, in the early months of 2016.
Founder Travis Kalanick has staked much of his group’s $62.5bn valuation on an aggressive growth drive in Asia, with the company launching in more than 70 cities around the region over the last two years.
In South Asia, Uber has so far focused solely on India, where it operates in 25 locations, its largest market by cities outside the US.
“We have India and now Sri Lanka, and we will soon be live in Lahore,” said Varun Mundkur, a member of Uber’s regional launch team. “We are seeing potential in many other adjacent countries [to India], so in time we will be exploring opportunities there as well.”
In east Asia, Uber grew by targeting major urban areas rather than particular countries. It launched first in Singapore, followed by Kuala Lumpur in Malaysia, Manila in the Philippines, and Bangkok in Thailand.
A number of other cities in countries bordering India fit a similar demographic and economic profile — notably Karachi in Pakistan, Dhaka in Bangladesh, Kathmandu in Nepal and Yangon in Myanmar — suggesting they are potential future targets for the American group.
Its Asian expansion has pitched San Francisco-based Uber into an fierce battle with regional competitors. Didi Kuaidi in China, Ola in India and GrabTaxi in Southeast Asia have joined with US-based Lyft in a formal anti-Uber alliance.
Uber’s latest move is an attempt to dominate select major cities in less developed markets around South Asia ahead of rivals, avoiding the expensive investment drives it has been forced into in both China and India, its largest growth markets, as it tries to catch up with market leaders Didi Kuaidi and Ola.
In a sign of its increasingly global ambitions, Didi on Tuesday named Yahoo co-founder Jerry Yang a senior advisor and board observer.
Analysts view Uber’s expansion in one of the world’s most populous regions as part of a wider plan to reassure investors about its growth potential, at a time of heightened scrutiny of so-called unicorn technology companies with valuations of more than $1bn.
“To justify more funding and higher valuations they need to increase their users, and all these megacities in South Asia have huge populations and virtually no public transport, so the potential is huge,” said Jaspal Singh, an India-based analyst at transport consultants Valoriser.
Particular challenges are likely to be involved in expansion into markets such as Pakistan, however, where cities are subject to occasional terror attacks, underscoring the complications of pushing into more complex developing Asian markets.
“Their [Uber’s] experience in India will have given them an insight into what it will be like in Bangladesh or Pakistan, but these countries are still not as easy to operate in as somewhere like Singapore, so there are bound to be complications,” said Mr Singh.
Additional reporting by Leslie Hook in San Francisco
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