Uber Faces Turkey Rival as Opposition From Yellow Cabs Grows

A Turkish startup plans to begin a cab-hailing service in Istanbul, where Uber Technologies Inc. is already facing increased opposition from the yellow taxis that dominate the city.

Olev, owned by Olev Tasimacilik Teknoloji Gelistirme Turizm AS, will start on Friday with a fleet of 250 cars, Chief Executive Officer Ertunc Ciris said by phone. The company, in which Mountain View, California-based 500 Startups Management Co. LLC has a minority stake, plans to expand the fleet to 1,500 within a year, he said.

Uber started offering services in Istanbul’s $1.5 billion taxi market in 2014, taking on the more than 18,000 local yellow cabs in the city of 17 million people. The San Francisco-based operator is facing mounting protests from yellow-cab drivers, who are losing market share as they struggle to maintain their cars and the quality of services with some of the lowest fares in the world.

“Our aim is to set up a fully legal company based in Turkey that will pay tax from every penny it makes and use local payment companies regulated by the banking watchdog,” said Ciris, who founded the company in 2015. Olev, which has a valuation of more than $10 million, is targeting 180 million liras ($56 million) in sales at the end of the first year in operation on the assumption that each vehicle will make 10,000 liras a month, he said.

Ciris said about 80 percent of Olev’s drivers have joined from Uber, which he said uses 400 cars in Istanbul. Olev, which is using a mobile app to connect drivers with riders like Uber, will receive 15 percent of any ride fare, he said. The payment company will get 2 percent and the rest will go to the driver, who will also have to pay tax on the income, he said.

Uber’s contracted and independent drivers say allegations by yellow cab drivers that it’s not legal in Turkey prompted police to fine their drivers and impound their cars in Istanbul.

Uber is a “fully legal and tax compliant” company in Turkey, it said in an e-mailed response to questions by Bloomberg. Some Uber drivers have their cars seized “because there is sometimes confusion about us being a transport company when in fact we are a technology company,” the company said.

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