Reports that Uber plans to sell South-east Asian business to Grab 'speculation', say both firms

CNBC had reported on Feb 17 that the Uber is preparing to sell its business in the region to its Singapore-based rival, in return for a substantial stake in Grab.
CNBC had reported on Feb 17 that the Uber is preparing to sell its business in the region to its Singapore-based rival, in return for a substantial stake in Grab.PHOTO: AFP

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

CNBC had reported on Saturday (Feb 17) that the American ride-hailing giant is 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 however 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.

The sentiment was echoed by Grab, which also said it does not comment on speculation.

Two years ago, Uber sold its business in China to Didi, in exchange for 20 per cent ownership.

In Russia, earlier this month (February), Uber completed a merger of its local operations with Yandex's ride-hailing business for a 37 per cent stake.

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 in January, also invests in Grab.

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

However, speaking to The Straits Times in January, Uber's Asia Pacific chief business officer Brooks Entwistle denied there was any conflict in Uber receiving funding from Softbank, the same group that is 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 last month saw the launch of UberFlash, 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 are barred from using the Grab app.

"That would put you out of business if there is no competitor like Uber," he said.

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 run implications.

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