Grab reportedly enters talks to buy Uber’s operations in Southeast Asia

The landscape of the country’s transport network vehicle services (TNVS) is about to get even more interesting in the coming weeks or months. Aside from the controversies the startup transport sector is incurring left and right with regards to Philippine regulations, there is a looming development that could possibly change the game, if we look at the bigger picture.

The buzz in the Southeast Asian capital markets is getting louder. There are reports that there are ongoing negotiations that could possibly end up with Singapore-based Grab acquiring the operations in the region of its rival Uber.

According to reports (citing well-placed sources) by tech news publications KR Asia, Japanese conglomerate Softbank Group Corp. could be instrumental in bringing this merger into a possibility. The bank infused a multi-billion dollar investment into Uber in 2017, making it sit as a board of director in both Uber and Grab (where it already is a major shareholder) at the same time.

Photo from Grab Philippines Facebook page

Focus on core markets
Speculations about this possibility immediately emerged on the same day Softbank became the biggest shareholder in Uber Technologies. In an interview with the Financial Times after the closing of the investment deal, Softbank Group Board Director and Softbank Investment Advisors CEO Rajeev Misra was quoted as saying that Uber would be better off focusing on its core markets in the U.S., Europe, Australia, and Latin America.

Several analysts interpreted the pronouncement as an intention to make Uber withdraw its operations in Southeast Asia, the Middle East, and Africa, markets where Grab could take over and be a sole ride-sharing service leader.

If this reported possibility pushes through, it would not be the first time for Uber to retreat from a market where it operates. In 2016, the company pulled out from China and instead invested in Didi Chuxing, its then Chinese rival. Uber was also previously forced out of Russia.

Photo from Uber Philippines Facebook page

Two potential scenarios
Two possibilities could also happen if a Grab-Uber merger in the region takes place. First, the two could still operate as distinct brands, though sharing back-end operations. Second, Uber could pull out of the market and hand over its market share to Grab. Either way, Grab would enjoy a monopoly, leading to less competition and more expensive service.

Uber currently operates in 60 cities across Southeast Asia, while Grab has presence in over 160 cities in the region, including key urban centers in Singapore, Malaysia, Thailand, and the Philippines.

Meanwhile, Uber CEO Dara Khosrowshahi in November said a speculated merger with Grab “was not a possibility” due to a capitalization glut in the region, which may continue for some time. In another report published in Singaporean online site Stuff this week, Uber reportedly refuted the speculations while re-affirming its commitment to continue investing in improvements of its service in the region.