Uber has exited three global markets by selling to rivals, but enough is enough after its deal with Grab so says CEO Dara Khosrowshahi.
Following today’s announcement with Grab which sees Uber leave Southeast Asia hot on the heels of exits in China (2016) and Russia (2017), Khosrowshahi told employees that there will be no more repeats under his leadership.
It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.
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. This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.
Rather that deals, the Uber CEO said he plans to develop the business organically via “growth that comes from building the best products, services and technology in the world.”
Since SoftBank’s investment in Uber closed in January there has been heightened speculation about potential consolidations in emerging markets, where the ride-hailing business is further from profitability than more developed markets like Europe and the U.S.. Indeed, SoftBank itself has called for Uber to focus on more financially-sustaining regions of the world.
Southeast Asia, where SoftBank has backed Grab, was a prime candidate for consolidation while India, where SoftBank-backed Ola competes with Grab, is another.
Just weeks ago, Khosrowshahi said Uber would invest to compete aggressively in Southeast Asia and yet this deal has been completed. Time will tell if this new denial of future deals will ring true, or whether SoftBank and others seeking consolidation will ring out.