Uber: the great retreat from Asia
After years of waging a costly turf war, Uber is to exit southeast Asia, having agreed to sell its operations to local rival Grab in exchange for a 27.5% stake in the company, said Richard Waters and Louise Lucas in the Financial Times. The move, which follows similar tactical withdrawals from Russia and China, is part of a geographical tidy-up ahead of Uber’s planned IPO next year. CEO Dara Khosrowshahi, who was brought in to stem huge losses and move the US ride-hailing group beyond a series of scandals, “sought to draw a line under the retreat”. But it “could set the stage for a similar departure from India”, where Uber is still battling the local giant, Ola.
The decision to throw in the towel on a fast-growing market spanning Indonesia, Malaysia, Singapore and the Philippines follows a “money-burning” battle with Grab that reportedly cost Uber $200m annually, said Josh Horwitz in Quartz. Ultimately, Singapore-based Grab’s local knowledge and ability to withstand much tighter margins won out – raising questions about Uber’s strategy of “barging into” foreign markets. Still, there is a consolation prize. Even if it doesn’t end up as the global giant it once aspired to be, Uber at least walks away with “hefty stakes” in local champions, such as Grab, China’s Didi and Russia’s Yandex.taxi.
“Uber was right to grab this opportunity to exit,” said Clara Ferreira Marques on Reuters Breakingviews. The writing was on the wall last year when the Japanese tech conglomerate Softbank – an existing backer of Grab and several other Uber rivals – injected cash into Uber and pushed for consolidation. Indeed, the clear winner from this latest development is Softbank, said the FT. Founder Masayoshi Son is now “one step further in his ambitions to dominate ridesharing worldwide”.