SMRT owns a taxi company in Singapore and it’s considering selling this company to a private hire firm known as Grab. If the deal goes through, SMRT, which is the island city-state’s 3rd biggest taxi operator and runs thirty-four hundred cabs, will get out of the taxi business. SMRT has been in this niche of business for well over two decades.
At present, details of the proposed deal point to SMRT retaining a chunk of Grab. Grab is a start-up from Malaysia and it’s a big competitor of Uber. As well, if the deal is signed, SMRT will appoint one of its VIPs to hold a spot on the Grab board of directors.
However, the deal certainly isn’t a done deal yet. There is a small problem, as the issue of jobs for SMRT taxi drivers is still being sorted out. SMRT is actually government-owned, via the Singapore government’s holding company, Temasek. SMRT is interested in Grab promising to give jobs to SMRT workers, so they won’t be unemployed if the sale goes through.
Grab doesn’t seem to like this part of the deal. According to rumors, Grab feels that it has a good team in place already and doesn’t want to take on the SMRT taxi drivers. This may become a big problem or it may be something which gets resolved.
This particular issue seems to be keeping the deal in limbo right now. A lot of negotiation will need to be done before both sides are happy with the deal’s various elements. At present, SMRT is analyzing its companies, because Temasek took on the role of sole owner last fall and also delisted the company.
According to industry insiders, Temasek is interested in getting SMRT to boost its rail business focus, with a mind to ensuring that LRT and MRT lines operate dependably. There have been dependability issues with these rail lines in recent years.
The cab company sale (if it happens) may signify SMRT’s commitment to selling off parts of its empire which don’t support the new focus on rail. As well, it’s probably about getting rid of low-margin elements of the business. For example, buses are considered to be low-margin.
SMRT did reduce its footprint within the bus niche recently, by losing route packages for Selatar and Bulim. They were lost to SBS Transit and Tower Transit.
In addition, SMRT reps were interested in starting up a mobility-focused business which would feature pods of the road-going type. However, that’s not going to happen in the foreseeable future, as Temasek has made the decision to focus on rail business.
Grab has been around since 2012 and it features seven hundred and eighty thousand drivers who are spread out in South-east Asia.
This Sale Will be Huge
If the deal goes through, and it’s all up in the air right now, it will be a huge business deal. Grab will grow and SMRT’s taxi service, which has been around for twenty-seven years, will become a part of history.