Rumors about the pending sale of uber’s business in South East Asia to rival Grab have been circulating for weeks. Now, it’s official and the two companies announced the acquisition. uber is selling their transportation business for a 27.5% in the rival with the uber CEO joining the board. The consolidation has been pushed by Softbank, a major stakeholder in both companies in a drive to make both companies more profitable. While that might be good news for shareholders, it’s not good news for customers. Less competition and greater profits are likely to mean higher prices and reduced service for customers in the region!
UPDATE: Read my review of the grab app and tips how to use grab at Manila Airport to make your visit to South East Asia smoother!
The sale includes uber operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The uber app will only continue to be usable for two weeks, not much time for drivers to transition and riders to download the new app and get used to it. uber eats will be available through May for a slightly longer transition.
Grab has a slightly different business model than uber. Their transportation business is tailored to the local needs of the region, for example including ride hailing for motorcycles or allowing cash payments. In addition to transportation and food delivery, they offer GrabPay, a mobile wallet intended to ease payments in under served markets.
While I certainly understand the business need for consolidation, considering that the industry has invested (or lost) more than $10 Billion to date, it is still bad news for riders in the short term. The consolidation means less choice and likely higher prices.
If you are a frequent traveler, it also means yet another app to download to your phone, one more app with your financial information – and all the problems that come with it. I for one have not been able to install the Grab app successfully on my US phone, despite numerous attempts. And I’m not keen on having my credit card information in yet another system where it possibly can be hacked.
In the long run, I expect other competitors to step up. Even small markets like Phnom Penh, Cambodia, have multiple operators and I wouldn’t be surprised for one of them to enter other markets as this opportunity opens up.
Stay tuned for a review of the app and tips how to use it around South East Asia!