Reports of Uber-Grab regional deal 'speculation'

Transport economist Walter Theseira said a deal between Uber and Grab would create a monopoly that could put other taxi operators at a disadvantage. ComfortDelGro may also be forced to relook its partnership with Uber, should the American firm strike
Transport economist Walter Theseira said a deal between Uber and Grab would create a monopoly that could put other taxi operators at a disadvantage. ComfortDelGro may also be forced to relook its partnership with Uber, should the American firm strike a deal with Grab.ST PHOTO: KUA CHEE SIONG

Both ride-hailing firms decline to comment, but observers say such a tie-up is 'inevitable'

Reports that Uber is planning to sell its business in South-east Asia to its rival Grab is speculative, say representatives of both ride-hailing firms.

CNBC had reported yesterday that the American ride-hailing giant was preparing to sell its business in the region to its Singapore-based rival, in return for a substantial stake in Grab.

Citing two sources familiar with the matter, the US news channel said no deal has been reached yet, and the timing of any deal is uncertain.

"We don't comment on rumours and speculation," said a spokesman for Uber.

Grab also said it does not comment on speculation.

Two years ago, Uber sold its business in China to Didi Chuxing, in exchange for 20 per cent ownership. In Russia earlier this month, Uber completed a merger of its local operations with Yandex's ride-hailing business for a 37 per cent stake.

NOT VIABLE

It was clear that as long as (both Grab and Uber) were splitting the market and fighting for market share with discounts, it would never be profitable

SINGAPORE UNIVERSITY OF SOCIAL SCIENCES TRANSPORT ECONOMIST WALTER THESEIRA

A deal between Grab and Uber would be in line with the American firm's moves in these markets, the CNBC report noted.

Japanese investment firm SoftBank, which bought a 15 per cent stake in Uber last month, also invests in Grab.

It also has a stake in numerous other ride-hailing firms worldwide, such as China's Didi Chuxing and Ola in India.

However, speaking to The Straits Times last month, Uber's Asia-Pacific chief business officer Brooks Entwistle denied there was any conflict in Uber receiving funding from SoftBank, which is also backing its regional rivals.

Mr Entwistle also said there are no plans for Uber to scale back its business, adding that he remained committed to ensuring Uber grows "efficiently" and in more markets.

However, observers say such a tie-up between Grab and Uber may be "inevitable".

"It was clear that as long as both parties were splitting the market and fighting for market share with discounts, it would never be profitable," said Singapore University of Social Sciences transport economist Walter Theseira.

However, he noted such a move would "certainly require regulatory approval".

A tie-up between Uber and ComfortDelGro, first announced in December last year, is still under review by the Competition Commission of Singapore.

Uber has about 14,000 vehicles under its car-rental firm Lion City Rentals, while ComfortDelGro is Singapore's largest taxi operator with more than 13,000 cabs, or more than half the total taxi population here.

The deal saw the launch of UberFlash last month, which allows for ComfortDelGro taxis to be booked through the Uber app.

It also includes ComfortDelGro taking a proposed 51 per cent stake in Uber-owned rental car business Lion City Holdings, valued at about $642 million.

ComfortDelGro may be forced to relook its partnership with Uber, should the American firm strike a deal with Grab.

"There is no guarantee that Grab will take up the terms that Uber agreed on, unless it has to assume all of Uber's existing responsibilities," said Dr Theseira.

A deal between Uber and Grab would also create a monopoly that could put other taxi operators at a disadvantage, he added.

A smaller taxi operator could be effectively squeezed out of the market if its drivers were barred from using the Grab app.

Grab is currently partnered with five taxi operators here - SMRT, Premier, Prime, Trans-Cab and HDT Singapore Taxi.

While Dr Theseira believes a deal between Uber and Grab would be "inevitable and economically efficient", there could be longer-term implications.

"I foresee that if it's approved, the market will have to be more tightly regulated."

A version of this article appeared in the print edition of The Sunday Times on February 18, 2018, with the headline 'Reports of Uber-Grab regional deal 'speculation''. Print Edition | Subscribe