Grab: Thanks, but no thanks.
ComfortDelGro dominates 60% of our taxi market and their latest flat-fare pricing may or may not have spurred this latest move by SMRT. Coupled with stiff competition from Grab and Uber, the taxi operator is now in talks to sell off its taxi business to the ride-hailing startup Grab.
SMRT has a total of 3,400 cabs, being our island’s third-largest fleet. If successful, the deal will see the sale of those cabs and the operator exiting the business it has been in for 27 years.
Bump Along The Road
The proposal comes with a few strings attached; SMRT wants a stake in the startup, and at least one seat on its board of directors. That’s not all they are asking, SMRT is hoping that Grab would take all of SMRT’s current employees under its wing.
It seems that SMRT’s many requests has halted any further discussions concerning the deal. The Malaysian startup is apparently not keen to take on more headcount on top of its own staff – which means that SMRT may lose its chance to shed its less than profitable business.
SMRT is banking a lot on this deal, since Temasek Holdings became its sole owner and wants the operator to solely focus on its MRT business – a decision likely stemming from the series of train breakdowns that have been plaguing them.
Why Grab?
Basically, they both already have a relationship that allows SMRT’s subsidiary Strides Transportation to be booked via the app. And if you’re interested in the more nitty-gritty details, SMRT is wholly owned by the government investment giant Temasek Holdings, and one of Grab’s investors is a subsidiary of Temasek Holdings.
While this news comes off as surprising to most Singaporeans, industry watchers have already foreseen this merger. SMRT’s also quickly disposing their less substantial businesses following their increasingly small market share in the bus and taxi sector.
Other than the future of their business, SMRT also needs to consider the future of its taxi drivers. With Grab unwilling to bring every one of SMRT’s staff under its wing, and SMRT being compelled to sell, the future of these drivers seem hazy. These drivers may just have to hop over to being private-hire drivers, but we’ll just wait and see.
