Uber drops the case in Southeast Asia
Uber yesterday Monday sold its Southeast Asian operations to its regional competitor Grab following an agreement marking a further withdrawal of the US chauffeur-driven vehicle services (VTC) company from a highly competitive international market.
Grab is taking over Uber’s food transportation and delivery operations in Southeast Asia in exchange for a 27.5% stake in the California-based firm, Grab, a Malaysian company based in Singapore, said.
This is for Uber a new withdrawal from a market where the American was subject to strong competition, at a time when the firm’s new boss, Dara Khosrowshahi (photo), is seeking to stem major losses and overcome a series of scandals.
After another fierce battle in Asia, Uber sold its operations in China in 2016 to its rival Didi Chuxing, China’s leading application for booking chauffeur-driven vehicles, also in exchange for a stake. And last year, the American firm merged its Russian operations with Internet giant Yandex.
The agreement with Grab — a company present in eight Southeast Asian countries and known primarily for its motorcycle taxi services via smartphone application — is similar to that with Didi and puts an end to years of bitter struggle for market share in Southeast Asia, a region with some 650 million people and an increasing number of upper middle classes.
Forcement fewer choices for customers
« Today’s acquisition marks the beginning of a new era, » said Grab boss Anthony Tan.
« The combined activities make it the leader in platform and cost control in the region, » he added.
Khosrowshabi stressed the benefits for Uber: « This agreement is a testament to Uber’s exceptional growth in Southeast Asia over the past five years. This will help us to double our growth plans, » added Uber’s boss, who will join Grab’s board of directors as part of the agreement.
Grab has been a dominant player in the VTC market in Southeast Asia for several years. Speculation of an agreement with Uber intensified after the Japanese telecom giant SoftBank Group acquired a 15% stake in the American in February.
Softbank is also a major investor in Grab and has also invested in the Indian Ola. Japanese is known to push for the consolidation of the chauffeur-driven vehicle services sector in the region.
Analysts note, however, that Monday’s agreement between Grab and Uber may result in a lack of competition that will lead to higher race prices.