SINGAPORE (Aug 22): Singapore’s largest taxi operator ComfortDelGro today announced it is in exclusive talks to form a potential strategic alliance with Uber Technologies – the private hire car service start-up that has put a dent in its business.
The collaboration could see ComfortDelGro’s fleet of more than 15,000 taxis being made available on Uber’s app.
In addition, the deal could see ComfortDelGro and Uber working together on management of fleet vehicles and booking software solutions in Singapore.
See also: Will Uber, Grab and Didi ever make money?
While the companies have signed an exclusivity letter, there is no certainty that such discussions will result in any definitive agreement.
However, ComfortDelGro says in a filing to SGX on Tuesday that the potential strategic alliance would “strengthen [its] position as a major mobility service provider in Singapore.”
The announcement comes amid continued weakness from ComfortDelGro’s taxi business, which has put the brakes on its earnings growth.
Faced with increasing competition from private hire car service providers such as Uber, ComfortDelGro saw the idle rate of its taxi fleet rise to 5% in 2Q17, leading to a 11% decline in taxi revenue during the quarter.
See: Taxi weakness puts the brakes on ComfortDelGro
The group’s earnings fell 6.8% to $79.4 million in the 2Q ended June, even as total group revenue slipped 3.4% to $987.2 million.
“The rapid growth of the private hire industry, fuelled by incentives and subsided fares, is something we continue to watch closely,” ComfortDelGro’s managing director and group CEO Yang Ban Seng said on Aug 11, when the company announced its quarterly results.
See: ComfortDelGro 2Q earnings fall 6.8% to $79.4 mil
Shares in ComfortDelGro closed 2 cents lower at $2.17 on Tuesday.
