In a surprising turn of events, dominant ride-hailing service Uber will exit the Southeast Asian market and sell its regional operations to rival Grab. In return, Grab will sell a stake in its company to Uber. It’s rumored that Uber will buy as much as 20% of Grab.

The agreement will be similar to the deal Uber had with Chinese ridesharing company Didi Chuxing in 2016, when the former sold its China operations to Didi in exchange for a stake in the company.

“I give Grab a lot of credit for executing well. They understand the local context better. Uber has been more about duplicating whatever they do in other parts of the world, and adapting a little bit,” said Zafar Momin, associate professor at Nanyang Technological University in Singapore.

The agreement ends a long and arduous battle for supremacy in the Southeast Asian ridesharing market, which is one of the fastest-growing markets in the world and home to over 600 million people. For Uber, it’s an opportunity to sort out its financial problems and boost profits in anticipation of its planned initial public offering (IPO) next year. The company has spent over $10 billion since it was founded in 2009.

Valued at $6 billion, Grab currently has operations in 178 cities in Southeast Asia, and its app has been downloaded over 80 million times. The company is currently in talks with potential investors such as Japan’s SoftBank. SoftBank also holds stakes in Uber, Didi, and India’s Ola.

Rajeev Misra, a SoftBank executive who will join the Uber board, said in an interview that Uber will focus on its core markets in the United States, Europe, Australia, and South America. Uber CEO Dara Khosrowshahi, however, said the company will continue to operate in Asia, particularly in Japan, where Uber is planning to partner with taxi companies.

With Uber’s impending withdrawal from Southeast Asia, what does it mean now for the ridesharing economy in the Philippines? How would this development affect the livelihood of thousands of Uber drivers? Please share your thoughts below.

Source: Bloomberg