- Uber is reportedly planning to sell its business in Southeast Asia to rival Grab.
- It’s likely to receive equity in Grab as part of the deal.
- Uber’s CEO said last week that operating in developing markets is an “optional investment” for the company.
Uber is reportedly preparing to sell its business in Southeast Asia to rival taxi company Grab, according to a report from CNBC. Uber would reportedly receive a “sizeable” stake in Grab as part of the deal, CNBC said.
Bloomberg wrote in 2017 that Uber was struggling to compete in Southeast Asia as Grab launched security features and took credit card payments, both things that Uber lacked. Uber, however, “feels like it’s pushing a business model and an app designed in and for wealthier markets,” Bloomberg wrote.
This wouldn’t be the first time that Uber sold off one of its international businesses. In 2016 it merged its Chinese division with local competitor Didi. Didi agreed to make a $US1 billion (£713 million) investment in Uber at a $US68 billion (£48 billion) valuation, and Uber China’s investors ended up owning 20% of the merged Chinese company, which was valued at $US35 billion (£24 billion).
This could be a new route to profitability for Uber
Uber CEO Dara Khosrowshahi said at the Goldman Sachs Technology and Internet Conference in San Francisco last week that Uber could sell off underperforming parts of its business in order to improve its finances ahead of an IPO in 2019.
“Where we are now as of Q4 is the developed markets, the contribution from the developed markets, essentially pays for the overhead of the business, alright,” Khosrowshahi said.
“Now, I include two things. And they’re a lot of money for those two things: One is the amount that we are investing in developing markets, that’s a significant negative but that is an optional investment for us. By the way, we think it should be on, it’s going to be on for a while, right? That gets us negative,” he said.
“And the big bets, autonomous etcetera also increase the negative. But if you just said, if someone says, ‘Forget about all this stuff, all I want is the core and just sell all the stuff or stop investing all the stuff,’ you would have a business that for a quarter was cash flow breakeven.”