Uber is selling up in Southeast Asia
Uber’s ride-hailing business is standing down in Southeast Asia. A deal with former rival Grab (not to be confused with Gab) has been announced, in which the company will buy Uber’s regional business in eight countries: Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The full details of the deal haven’t been disclosed, but the price is described as being worth “several billion dollars” by Uber CEO Dara Khosrowshahi and will see Uber taking a 27.5% stake in Grab. Khosrowshahi will also take a seat on Grab’s board as the final cherry on the deal cake.
You may not be familiar with Grab, but it’s a huge player in the east. Backed by Softbank, the company was last valued at around $6 billion and has fingers in a number of different tech pies. As well as its ride-hailing services, the company has its own payment system called GrabPay, for example.
“I’m conscious that much of the hard work happened before I arrived, and I want to recognise the operations you have built across these eight countries,” Khosrowshahi said in an email to Southeast Asia employees announcing the sale. “After investing $700 million in the region, we will hold a stake worth several billion dollars, and strategic ownership in what we believe will be the winner in an important global region.”
For those keeping track, this is the third time Uber has exited a market it sought to dominate in as many years. The company sold its Chinese operation to Didi in 2016, and its Russian business to Yandex.Taxi in 2017. Is this going to become an annual event until there’s nothing left? No, according to Khosroshahi.
“The answer is no,” he wrote. “One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”
It seems like a sensible move to me. By taking a share in Grab, the company maintains an interest, without having to finetune its business operation for a set of countries where it was always an outsider facing an uphill battle. Uber can now concentrate on Europe, America, India, the Middle East and Latin America without having to worry about competing with a rival that always had superior local knowledge. There’s definitely something to be said for that strategy.