Uber sell South East Asian operations to Grab

Over the past few months, we have seen Uber make some rather huge announcements, eager to tighten their belts and operate a clean, flourishing business. Expected to float on the Stock Exchange next year, Uber has this week made yet another surprise move, selling its South East Asian operations.

In a plea to cut losses, Uber sold their ride-hailing app and food delivery business to regional competitor; Grab. Having left China back in 2016 and recently exited from Russia, it appears it is a significant time of change for the technology company.

Cutting ties with Asia almost completely, Uber’s CEO recently said that ventures on the continent were not looking “profitable any time soon”.

As part of the sale, Uber will now take a 27.5% stake in Asia-based Grab; with Uber’s CEO, Dara Khosrowshahi, also sitting on the business’ board.

According to recent reports, Uber lost a substantial $4.5bn (£3.2bn) last year as a result of too much direct competition in Europe and across the globe. Enhanced by tough regulatory crackdowns on the business, removing side projects and distractions certainly makes sense.

Announcing details of the deal in a blog, the CEO reiterated this point:

“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.”

However, many analysts and researchers are placing this move down to Uber’s overaggressive nature, suggesting that the company ran before it could walk when it came to global expansion.

One Singapore-based researcher has been very vocal on the subject. In a statement, Corrine Png of Crucial Perspective said:

Uber is seeking an IPO but that might be delayed depending on whether Khosrowshahi is able to address Uber’s cash burn problem as well as countering rival Lyft’s renewed strength in the US.

Uber has been expanding overaggressively and assumed that it would be able to outspend Yandex in Russia, Didi Chuxing in China and Grab in south-east Asia but it turns out that Uber’s rivals were equally well-resourced. Uber would have been better off simply investing in Yandex, Didi Chuxing and Grab from the start.”

A step in the right direction for Grab

However, this is an immensely positive step forward for Grab, with the company’s Co-Founder, Anthony Tan, saying the following:

“We are humbled that a company born in SEA has built one of the largest platforms that millions of consumers use daily and provides income opportunities to over 5 million people. Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers. Their trust in us as a transport brand allows us to look towards the next step as a company: improving people’s lives through food, payments and financial services.”

Let us know what you think, is this a good meeting of minds?