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Uber Surges on Reports It's Planning to Sell Uber Eats in India

Uber lost more than $1 billion in the third quarter, and said recently it would 'look at alternatives' in markets where it isn't the number one or two competitor.
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Uber may be looking to ditch its food delivery business in India.

Uber  (UBER) - Get Uber Technologies Inc. Report shares were up 4.9% on Monday following reports that it’s nearing a deal to sell the Indian arm of Uber Eats to a local competitor, Zomato.

The deal could be completed as soon as this week, according to the Wall Street Journal. Uber could not be reached for comment on the reports. Separately, Uber has reportedly submitted an appeal of a ruling by London regulators to revoke its license to operate in that city because of safety violations. 

Since going public in May, Uber’s significant losses have come under the microscope by investors and analysts. Uber lost $1.16 billion in the third quarter, exceeding analysts' estimates. Uber doesn’t break out losses regionally, but Barclays estimated recently that its Uber Eats business in India is burning around $400 million per year.

Uber management has recently shown a willingness to exit markets that no longer make financial sense.

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In September, Uber announced that it would terminate its Uber Eats business in South Korea, a market in which, like India, it faced intense competition. 

At a recent Barclays conference, Uber CEO Dara Khosrowshahi didn’t say whether or not his company intended to sell Uber Eats India, but emphasized that “rationalization” is underway in the food delivery market alongside the broader rideshare industry.

“We do feel like too much capital has shaped the category,” he said, speaking of food delivery. “We were pretty clear in our strategy which is we believe that we can get to number one or number two position in a significant number of markets in which we compete with Eats. And if we don't get to a number one or number two position, we will look at alternatives just like we looked at alternatives in the rideshare business in a constructive way.”

Research indicates that Uber Eats has struggled to compete with local competitors in India. The top food delivery app in India by transactional volume is Swiggy, followed by Zomato and FoodPanda, according to market intelligence firm Kalagato.

Uber shares have fallen 27% since it went public.