Uber enters into JV with SK Telecom to advance in tough South Korean market

US-based ride-hailing giant Uber announced that it has entered into a joint venture (JV) with SK Telecom – South Korea’s wireless telecom operator – to drive its growth in the country.

Photo credit: Elliot Brown (CC2.0)

The move is expected to be an attempt by Uber to make a break into the market where it faces tough competition from local players such as Kakao’s mobility unit, which is the current market leader. In 2015, the US-based firm also faced opposition from taxi drivers and regulations which forced it to stop using private cars for its ride-hailing services, according to a Reuters report.

Uber will invest over US$100 million in the joint venture and an additional amount of around US$50 million in T Map Mobility, a new entity launched by SK Telecom, according to a statement. The ride-hailing giant said that the joint venture is expected to begin operations in the first half of 2021, subject to regulatory approval.

For its part, SK Telecom will launch T Map Mobility, a specialized company in the mobility business, within this year by splitting off its mobility unit business – which includes services T Map and T Map Taxi – and adding it under the new JV unit.

It claims that T Map is the largest mobility platform in the country, with around 13 million monthly active users (MAUs), while T Map Taxi is the nation’s second-largest taxi-hailing service with 200,000 registered drivers and 750,000 MAUs.

SK Telecom also plans to secure funding for T Map Mobility by attracting investment from external investors.

T Map Mobility, meanwhile, will focus on four main mobility services that will include parking, advertising, and usage-based insurance, as well as taxi-hailing and designated driver services. Offers like in-vehicle infotainment, in-car payments, and all-in-one mobility subscriptions are also in the pipeline.

SK Telecom claims its new entity is valued at 1 trillion South Korean won (roughly US$873 million) and expects it to grow to 4.5 trillion South Korean won (~US$3.9 billion) by 2025.

SK Telecom – a part of the conglomerate SK Group – said it accounts for nearly half of the nation’s mobile market with over 30 million subscribers. It currently has 47 information and communications technology subsidiaries and annual revenues approaching 17.8 trillion South Korean won (~US$15.5 billion).

Currency converted from South Korean won to US dollar: US$1 = 1,145.23 won.