Uber Is Selling Southeast Asian Operations to Ride-Hailing Rival Grab

Uber will then take a 27.5 percent stake in Grab.

Jaap Arriens/NurPhoto

After selling off its Chinese and Russian operations to local rivals, Uber is pulling out of yet another market. The ride-hailing company is selling its Southeast Asian business to Grab, which has become a major Uber competitor in that territory.

Uber announced the sale by releasing two emails from CEO Dara Khosrowshahi to employees in Southeast Asia. About 500 Uber employees will transition to Grab, Khosrowshahi said, and Uber customers will be directed to the Grab app. Uber will also take a 27.5 percent stake in Grab.

Khosrowshahi said Uber has invested $700 million in Southeast Asia since it began operating in Singapore about five years ago. Uber also operates in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam. But Khosrowshahi believes the company needs to be more focused on its operations.

"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," Khosrowshahi said in one email. "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."

This is Uber's third recent sale of a major chunk of its international business. In July 2016, it sold its Chinese business to local rival Didi Chuxing, and merged its Russian operations with local tech company Yandex last year. Rumors of a deal with Grab have circulated since Japan's SoftBank, a Grab investor, began investing in Uber last December.

Grab has been catching up to Uber in Southeast Asia. The company has steadily increased business while scoring investments from Hyundai and Toyota. Meanwhile, Uber suffered a setback last year when it was temporarily suspended from operating in the Philippines--one of the largest ride-hailing markets in the region.

Rather than growing its business, Uber now spends much of its time addressing scandals. Khosrwoshahi was brought in as CEO last September after Travis Kalanick resigned in a hail of scandals. The company's luck seemed to be turning around when it settled a self-driving car trade secrets lawsuit with Waymo, but now Uber must deal with the fallout of a fatal crash involving one of its autonomous cars in Arizona.