Is Uber selling its Southeast Asia business to Grab?

Comment

Image Credits: ANTHONY WALLACE

If you read the tech press, you might have seen reports that Uber is pursuing a sale in Southeast Asia that would see Grab, its Singapore-headquartered rival valued at $6 billion, acquire Uber’s business in the region.

Rumors of such a tie-in have been rife for a while. Uber sold its China business in exactly such an arrangement in 2016, and it made a similar exit from Russia last year. In both cases, the firm’s motivation was to purportedly shape up for a potential IPO by offloading loss-making units that had lost the local market.

Why not, then, extend that into Southeast Asia and sell to Grab?

There is competition.

Reliable data is hard to come by, but it is fairly widely accepted that Uber, once the leader in Southeast Asia, has dropped behind Grab across the region as a whole, while both companies trail local startup Go-Jek — a unicorn itself, too — in Indonesia, the only market Go-Jek operates in.

There are challenges.

Despite a cumulative population that exceeds 600 million people, Southeast Asia’s ride-sharing business did just $5.1 billion last year, according to estimates from a report authored by Google and investment firm Temasek. Uber is not expected to be profitable in the region “in the near future,” CEO Dara Khosrowshahi said last year.

There is the motivation.

Uber and Grab share a common investor in SoftBank. The Japanese firm first backed Grab back in 2014, and it recently pumped in $2 billion in fresh capital alongside China’s Didi Chuxing — the company that bought Uber China and, by virtue of that deal, is also an Uber stockholder. SoftBank, of course, secured a much-publicized investment in Uber in January.

Pitting two of its portfolio together in a loss-making market probably doesn’t make sense to SoftBank at this point.

Someone, somewhere, seems very keen to make a deal happen, and so we have the reports.

Last week, CNBC cited two people “with knowledge of the matter” who said that Uber “is preparing to sell Southeast Asia unit to Grab.”

The news was widely re-reported by a number of other media. But if you skip down to the second line of the original CNBC article, the transaction seems less definitive that the title suggests.

“No deal has been reached yet, and the timing of any such deal is uncertain,” CNBC reporter Alex Sherman wrote.

Uber and Grab both declined to comment on the report when we asked.

The Grab office in Singapore

The deal can make sense in financial terms, as above, but in practice there are certainly some question marks.

Uber may have fallen behind Grab, but it still has the brand. Uber invented ride-hailing, and it can continue to maintain a sizable market share, if not close the gap with some investment.

The word Uber is already a verb to many people, such is the company’s profile, and that isn’t just limited to the English language. There’s a huge amount of consumer awareness that Uber trades on, even when its competitors push hard with discounts, marketing and other strategies, is very much alive in Southeast Asia.

The market in the region is tipped to grow massively.

The same Google-Temasek report noted that the ride-hailing market in Southeast Asia has grown four-fold since 2015 and it is tipped to reach $20.1 billion by 2025. More generally, Southeast Asia is now the world’s third-largest region for internet users — with more people online than the entire U.S. population — with upwards of 3.8 million people coming online for the first time each month.

It might be hasty for Uber to retreat at this time. Certainly, the chips are down and things have been better, but the game is far from won as it was in China, where Uber had little mainstream recognition and was spending over $1 billion just to try to keep up with Didi.

There hasn’t been much of a reaction to the reports from Uber, but this week Khosrowshahi — who was in India as part of his first Asia tour with Uber — made a series of bullish comments that seemed to reaffirm a commitment to Southeast Asia, according to Reuters.

“We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies etc,” Khosrowshahi told reporters in New Delhi, adding there is huge potential in the region thanks to a big population and fast internet user growth.

You could, of course, offer a counter argument that Khosrowshahi is playing hard to get or making negotiations with Grab tougher. But the Uber CEO also pointed out to press that SoftBank is just one shareholder and thus its aims and objective don’t represent the path that the company will take.

From Reuters again:

Khosrowshahi said SoftBank is an investor but Uber, which has a valuation of around $68 billion, will take any final decisions along with the board on mergers and partnerships.

There has certainly been some suspicion that the leaks may be coming from the investor side of Uber/Grab, given the benefits that consolidation might bring. The fact that these leaks have also intensified since SoftBank became interested in an Uber investment, certainly gives credence to that theory.

Indeed, SoftBank board member Rajeev Misra — who joined the Uber board following the investment — told the Financial Times that Uber should focus on Western markets and cut its losses in emerging regions.

Is SoftBank the source of these new leaks? You can draw your own conclusions.

So, while a deal might make some sense on paper, reports of an imminent acquisition seem wide of the mark. That said, this is the ride-hailing industry, and anything can happen.

More TechCrunch

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android

A hacker listed the data allegedly breached from Samco on a known cybercrime forum.

Hacker claims theft of India’s Samco account data

A top European privacy watchdog is investigating following the recent breaches of Dell customers’ personal information, TechCrunch has learned.  Ireland’s Data Protection Commission (DPC) deputy commissioner Graham Doyle confirmed to…

Ireland privacy watchdog confirms Dell data breach investigation

Ampere and Qualcomm aren’t the most obvious of partners. Both, after all, offer Arm-based chips for running data center servers (though Qualcomm’s largest market remains mobile). But as the two…

Ampere teams up with Qualcomm to launch an Arm-based AI server

At Google’s I/O developer conference, the company made its case to developers — and to some extent, consumers — why its bets on AI are ahead of rivals. At the…

Google I/O was an AI evolution, not a revolution

TechCrunch Disrupt has always been the ultimate convergence point for all things startup and tech. In the bustling world of innovation, it serves as the “big top” tent, where entrepreneurs,…

Meet the Magnificent Six: A tour of the stages at Disrupt 2024

There’s apparently a lot of demand for an on-demand handyperson. Khosla Ventures and Pear VC have just tripled down on their investment in Honey Homes, which offers up a dedicated…

Khosla Ventures, Pear VC triple down on Honey Homes, a smart way to hire a handyman

TikTok is testing the ability for users to upload 60-minute videos, the company confirmed to TechCrunch on Thursday. The feature is available to a limited group of users in select…

TikTok tests 60-minute video uploads as it continues to take on YouTube

Flock Safety is a multibillion-dollar startup that’s got eyes everywhere. As of Wednesday, with the company’s new Solar Condor cameras, those eyes are solar-powered and use wireless 5G networks to…

Flock Safety’s solar-powered cameras could make surveillance more widespread

Since he was very young, Bar Mor knew that he would inevitably do something with real estate. His family was involved in all types of real estate projects, from ground-up…

Agora raises $34M Series B to keep building the Carta for real estate

Poshmark, the social commerce site that lets people buy and sell new and used items to each other, launched a paid marketing tool on Thursday, giving sellers the ability to…

Poshmark’s ‘Promoted Closet’ tool lets sellers boost all their listings at once

Google is launching a Gemini add-on for educational institutes through Google Workspace.

Google adds Gemini to its Education suite

More money for the generative AI boom: Y Combinator-backed developer infrastructure startup Recall.ai announced Thursday it has raised a $10 million Series A funding round, bringing its total raised to over…

YC-backed Recall.ai gets $10M Series A to help companies use virtual meeting data

Engineers Adam Keating and Jeremy Andrews were tired of using spreadsheets and screenshots to collab with teammates — so they launched a startup, CoLab, to build a better way. The…

CoLab’s collaborative tools for engineers line up $21M in new funding

Reddit announced on Wednesday that it is reintroducing its awards system after shutting down the program last year. The company said that most of the mechanisms related to awards will…

Reddit reintroduces its awards system

Sigma Computing, a startup building a range of data analytics and business intelligence tools, has raised $200 million in a fresh VC round.

Sigma is building a suite of collaborative data analytics tools