SK‘s TMAP Mobility to sell Uber stake

[Courtesy of Uber Technologies Inc.]

SK square Co. subsidiary TMAP Mobility is set to sell its stake in UT LLC, a joint venture with global carsharing platform Uber Technologies Inc., to exit the South Korean domestic taxi business as SK Group takes steps to realign its business.

According to sources in the investment banking industry on Wednesday, TMAP Mobility recently began negotiations to liquidate its UT shares. Uber is reportedly considering buying all TMAP Mobility’s stakes and independently running the business. UT rebranded its service to “Uber Taxi” earlier in February 2024, which hinted at changes in the partnership.

UT was founded in April 2021 with Uber and TMAP Mobility contributing 51 percent and 49 percent respectively. UT initially aimed to challenge the dominant player, Kakao Mobility Corp., in the Korean taxi-hailing market, but did not achieve significant success. According to mobile data analytics platform Mobile Index, the monthly active users (MAUs) of KakaoT, Kakao Mobility’s taxi application, totaled about 13.22 million as of June 2024, about 19 times more than Uber Taxi‘s 690,000.

“We understand that TMAP Mobility decided to focus internally on high-growth, high-value-added data businesses while exiting the controversial taxi business ahead of the IPO,” an industry insider said.

TMAP Mobility’s decision to streamline the taxi business aligns with SK Group‘s recent strategic shifts to recalibrate group businesses, eliminating deficit-accumulating ventures and refocusing on areas with high growth potential. Previously, SK Group Chairman Chey Tae-won highlighted “qualitative growth” during a top executive meeting at the end of June 2024.

Since its launch in 2021, TMAP Mobility had focused on expanding vertical services such as airport buses, kickboards, bicycles, and chauffeur services. But it shifted to a strategy of “efficiency” in its real assets with ambiguous identities in 2024. ”Even though Kakao has over 90 percent of the taxi market, it still struggles to turn a profit due to high promotion costs and complex government regulations,” a second industry insider explained.

Instead, TMAP Mobility is focusing on enhancing profitability through its data business. It recently began generating revenue by providing usage-based insurance (UBI) information to insurance companies offering driving score-based discounts and credit rating agencies developing alternative credit evaluation models.

Selling its stake in UT is expected to improve TMAP Mobility’s finances. TMAP Mobility aims to achieve a turnaround to profitability in 2024 based on earnings before interest, taxes, depreciation, and amortization before its listing.