Finance

Uber agrees to sell its Southeast Asian operations to Grab

Uber agrees to sell its Southeast Asian operations to Grab”

Cab hailing firm Uber has chose to sell its ride and food delivery businesses in Southeast Asia to Singapore-based rival, Grab.

The sale of Uber's regional business marks the first major consolidation efforts among ride-hailing companies in Southeast Asia. Uber will get a 27.5% stake in the combined firm, 500 staff will transition to Grab, and its customers will be shifted over to Grab's apps.

Grab raised about $2.5 billion last July from Didi, SoftBank and others in a deal valuing the company at around $6 billion.

Uber has agreed to sell its south-east Asia operations to local rival Grab for an undisclosed sum as it continues to retreat from the region.

But Grab, which operates in 195 cities in eight Southeast Asian countries, became the dominant force in ride-hailing, leaving its troubled U.S. rival struggling. Uber CEO Dara Khosrowshahi has said that this is the last such deal.

Uber's Khosrowshahi said the deal would "help us double down on our plans for growth as we invest heavily in our products and technology". Grab marked a major milestone past year, completing its one billionth ride in Southeast Asia, with its app now being downloaded in 90 million mobile devices.

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"Grab provides enough promotions for my liking, and even if sometimes they don't, I don't mind paying the full price", said Choltanutkun Tun-atiruj, a magazine writer, who said she preferred Grab's services and relied on it in her everyday life.

Uber's operations will become part of Grab in Southeast Asia, which includes countries such as Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. For instance, Grab let passengers text drivers via a chat feature within the app with in-built automated translation feature.

This would further erode ComfortDelGro's competitive advantage of having scale in the ride-booking industry, said Mr Eugene Chua, investment analyst at OCBC Investment Research.

Why Grab? Why not Uber? It is a no-brainer, Uber faced a long road before it could see sustainable margins (if not the profitable ones) in the region comparable to what it can earn in American cities with higher starting fares. The company's average net loss expanded to $4.5 billion in 2017 as it encountered numerous improprieties and the withdrawal of its co-founder and erstwhile CEO Travis Kalanick.

As for existing Uber drivers, here's how the acquisition will affect them. The US firm has taken 5.89 per cent stake in Didi.



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