Southeast Asian ride-hailing firm Grab has been in talks with rival Uber to acquire its regional operations in a bid to tighten its grip on the rapidly growing shared transportation sector, Kr-Asia quoted people familiar with the matter as saying.
As the world’s fourth-largest internet market, Southeast Asia has a mushrooming young population with more disposal income.
Uber has reportedly been unable to turn a profit in its Asian markets, where it faces fierce competition from homegrown players like Grab in Southeast Asia, Go-Jek in Indonesia and Ola in India.
Uber CEO Dara Khosrowshahi has acknowledged the challenges Uber faces in Southeast Asia, saying the market is “over-capitalized at this point.”
“We’re going in, and we’re leaning forward. But I’m not optimistic that market is going to be profitable any time soon,” he said.
Shutting down Uber’s Southeast Asia operations to cut losses would enable the firm to “print money”, making for a much more palatable IPO, Reuters quoted one Uber investor, who declined to be named, as saying. Uber says it plans a stock market listing in 2019.
While many tech firms go public without a profit, Uber’s level of loss – $645 million in the second quarter of 2017 – could be alarming to some investors, according to Reuters.
A Reuters report said that Rajeev Misra, chief executive of the Vision Fund of SoftBank, which became Uber’s largest shareholder following a stake purchase last month, wants Uber to focus on growing in the United States, Europe, Latin America and Australia, and not Asia.
Asia has been among the most costly and competitive regions for the ride-services firm, the report said, citing an unnamed source.
Observers have suggested that for Southeast Asia, the U.S. company might take the same route it did in China and Russia, where it effectively exited the market and left it to local players.
China’s ride-hailing giant Didi Chuxing acquired Uber’s China unit in a deal worth $35 billion in 2016.
Grab last year claimed that it had taken a market share of 95 percent in third-party taxi-hailing and 71 percent in private vehicle hailing in Southeast Asia have completed 1 billion rides.
Uber hasn’t announced its market share in Southeast Asia, but it did declare last June that it had crossed the 5 billion trips milestone. Yet the company, which has a presence in more than 80 countries, didn’t offer a breakdown of the figure.
Starting out in Malaysia, Grab now offers wide-ranging services in more than 160 cities across Malaysia, Singapore, Indonesia, India, Thailand, the Philippines, Vietnam, Myanmar and Cambodia, while Uber operates in just around 60 cities in the region.
Grab and Uber arrived in Vietnam in 2014 and operate both car and motorbike taxi services. The two services have been running on a trial basis since early 2016, but have been caught up in a turf war with traditional taxi drivers.
Many taxi firms have accused Grab and Uber of “unfair competition” that has hit their businesses and caused thousands of drivers to quit.
Last September, Hanoi Taxi Association said Uber and Grab had been transferring around $150 million overseas every year to evade taxes. Grab denied the accusation.
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