SMRT in talks to sell its taxi business to Grab

[Raubern]

SINGAPORE - SMRT is in talks to sell its taxi business to private-hire operator Grab.

 

If successful, the deal will see SMRT, the third largest cab operator, exiting the business it has been in for 27 years.

 

The proposal is also for SMRT to have a stake in Grab - a Malaysian start-up that is seen to be a keen rival of Uber - and at least one seat on its board of directors.

 

The Straits Times understands however, that the proposed deal has hit a bump over the jobs of SMRT Taxis' workers.

 

SMRT, fully owned by the government's Temasek Holdings, wants the buyer to ensure all affected workers retain their jobs. But Grab it seems is not keen to take on more headcount as it has its own staff.

 

"Because of this, the sale is nowhere close to a deal," a source familiar with the talks said.

 

SMRT is reviewing its businesses since Temasek became it's sole owner and delisted it last November.

 

It is understood the government investment giant wants SMRT to double up its focus on the rail business, with a view to make the MRT and LRT lines it operates far more reliable than they have been in recent years.

 

The taxi sale, if successful, could signal SMRT's disposal of other less substantial businesses with low margins - such as buses.

 

Its smallish footprint in the bus sector grew even smaller when it lost the Bulim and Selatar route packages to Tower Transit and SBS Transit respectively.

 

SMRT had also wanted to start a mobility business based on autonomous road-going pods. But that too, has been shelved because of Temasek's focus to get the rail business fully back on track.

 

http://www.straitstimes.com/singapore/transport/smrt-in-talks-to-sell-taxi-business-to-grab

[Blueray]

 

 

SMRT, fully owned by the government's Temasek Holdings, wants the buyer to ensure all affected workers retain their jobs. But Grab it seems is not keen to take on more headcount as it has its own staff. "Because of this, the sale is nowhere close to a deal," a source familiar with the talks said.

 

Hmmm ... let's see how they sort this out. 

[Yewheng]

Grab taxi.. Can use grab to book taxi, can also flag down grab taxi on the road. Win win for consumers..

[Lurpsexx]

Hmmm ... let's see how they sort this out. 

the current ruling party will remove any issue that threatens its existence as the power of the land.. so getting the train service back on track (literally) and on schedule with no downtime, is the key to eliminating the people's grouse which threatens its continued rule.

 

Kachang puteh issues like SMRT taxi etc not impt and will be on the back burner.. any way, sell to Grab also left pocket right pocket, as the ultimate holding co (Temasek Holdings) is also a shareholder in GRab. So its just shadow play on this issue, no real loss or gain.

[Kb27]

I believe Grab is like Uber.

They run a app making business, a management business of sorts to match riders with drivers and take a cut as a middleman.

They are most likely not interested in holding onto "hard" assets like taxis or cars or taxi drivers for that matter.

 

It's like telling Uber to buy New York Taxis.

[Yewheng]

I believe Grab is like Uber.

They run a app making business, a management business of sorts to match riders with drivers and take a cut as a middleman.

They are most likely not interested in holding onto "hard" assets like taxis or cars or taxi drivers for that matter.

 

It's like telling Uber to buy New York Taxis.

If that's the case, then there will never be in discussion in the 1st place.

 

From news report it seems like they had met up for discussion and only thing disagree is the part where grab unable to take in all smrt employees as they have their own set of people running the business already.

 

So to have discussion on the takeover means grab is also keen to look into the possibility to buy over smrt.

Edited April 22, 2017 by Yewheng

[Lurpsexx]

If that's the case, then there will never be in discussion in the 1st place.

 

From news report it seems like they had met up for discussion and only thing disagree is the part where grab unable to take in all smrt employees as they have their own set of people running the business already.

 

So to have discussion on the takeover means grab is also keen to look into the possibility to buy over smrt.

 

I would think the hands behind this proposal is the same one... temasek holdings is involved in both parties, and would hold sway on the decision making.. definitely this will be a win-win proposition for both parties with Temasek pulling the strings behind the scene. Only Temasek will know the real reasons and desired outcomes from this proposal. The rest are all just in for the ride..... 

[Mustank]

https://youtu.be/VEAuMiKqP-4

[Lurpsexx]

https://youtu.be/VEAuMiKqP-4

Great song! Can't praise you yet, so +5 here for you..

[DACH]

Hmmm ... let's see how they sort this out. 

Grab may likely to attract (convert) some of the cab drivers to drive their idling private hire cars, from rent paying cabs. There are actually many cab drivers switching to private hiring recently.

Some others will just switch to other taxi companies, knowing the instability of the cab company in future. 

 

 

It's a matter of time SMRT buses will fold up too, which is a good thing. They have never put in their hearts to operate the bus operations anyway, and they have been wanting to give up the bus operations.years ago, because it has never been managed properly to make money.

http://sgforums.com/forums/1279/topics/472968

[Ender]

Grab may likely to attract (convert) some of the cab drivers to drive their idling private hire cars, from rent paying cabs. There are actually many cab drivers switching to private hiring recently.

Some others will just switch to other taxi companies, knowing the instability of the cab company in future.

 

 

It's a matter of time SMRT buses will fold up too, which is a good thing. They have never put in their hearts to operate the bus operations anyway, and they have been wanting to give up the bus operations.years ago, because it has never been managed properly to make money.

http://sgforums.com/forums/1279/topics/472968

The link you provided, with nicks like sbst625, sbs9186, never knew there so many bus otaku in singapore.

[DACH]

The link you provided, with nicks like sbst625, sbs9186, never knew there so many bus otaku in singapore.

Some of them worked in the industry. 

But try not to join the discussion there. 

[Blueray]

Grab may likely to attract (convert) some of the cab drivers to drive their idling private hire cars, from rent paying cabs. There are actually many cab drivers switching to private hiring recently.

Some others will just switch to other taxi companies, knowing the instability of the cab company in future. 

 

 

It's a matter of time SMRT buses will fold up too, which is a good thing. They have never put in their hearts to operate the bus operations anyway, and they have been wanting to give up the bus operations.years ago, because it has never been managed properly to make money.

http://sgforums.com/forums/1279/topics/472968

 

Actually, I kinda prefer SMRT buses cos they sometimes get me to my destination faster.  

 

Buses are still an essential form of public transport but I guess if its operated solely on a for-profit model, then I think either commuters or shareholders will be disappointed. Cannot meet expectations of both groups at the same time for this business. 

 

Well, maybe with new foreign players coming into the local bus scene, public transport landscape here may change. 

[Victor68]

Both Grab and Uber arent interested in taxi biz lah. they are interested in finance.

 

SMRT wants out from taxi operation because there the cake is shared with too many parties. It is timely to review taxi operation here. it is one of most confusing fee structure in the world.

[DACH]

Actually, I kinda prefer SMRT buses cos they sometimes get me to my destination faster.  

 

Buses are still an essential form of public transport but I guess if its operated solely on a for-profit model, then I think either commuters or shareholders will be disappointed. Cannot meet expectations of both groups at the same time for this business. 

 

Well, maybe with new foreign players coming into the local bus scene, public transport landscape here may change. 

Foreign players have to abide with the minimum but demanding standards of our bus services here. So far Tower Transit is doing well. GoAhead had a bad start with drivers quitting over scheduling problems. Some of the services they took over have reliability issues, like the example of service 36 I brought out earlier. 

 

They also have to be competitive in the pricing of the bidding for the route packages. If the packages is awarded too high, these costs will be passed to the commuters with more fare increases, leading to more complains. 

[Blueray]

Foreign players have to abide with the minimum but demanding standards of our bus services here. So far Tower Transit is doing well. GoAhead had a bad start with drivers quitting over scheduling problems. Some of the services they took over have reliability issues, like the example of service 36 I brought out earlier. 

 

They also have to be competitive in the pricing of the bidding for the route packages. If the packages is awarded too high, these costs will be passed to the commuters with more fare increases, leading to more complains. 

 

This model of operators tending for bus routes is being used in other big cities eg Hong Kong (and maybe London, Sydney ?). So its not something new. Its about setting realistic parameters to meet expectations from both customers and shareholders. I reckon LTA is still going thru the learning curve on this. But buses bring buses, sometimes will still have issues due to variable road conditions. 

 

And these days with bus apps, can plan my activity so that I minimise the waiting time at the bus stop.

[Benarsenal]

Temasek only got minority share in Grab (which is still a Malaysian company btw) so don't think they will have much say in purchase.

 

I'm not sure what owning a taxi company would do for Grab. They're only an app platform and don't really own any vehicular assets (the cars all rental from other companies), so having SMRT's taxis would only be additional financial burden with no relevant increase in income.

[DACH]

This model of operators tending for bus routes is being used in other big cities eg Hong Kong (and maybe London, Sydney ?). So its not something new. Its about setting realistic parameters to meet expectations from both customers and shareholders. I reckon LTA is still going thru the learning curve on this. But buses bring buses, sometimes will still have issues due to variable road conditions. 

 

And these days with bus apps, can plan my activity so that I minimise the waiting time at the bus stop.

Yes, this model is still in its infancy stage and It is now being used in some cities.

However operating demands here is different from other countries. And the markets in these countries are far more bigger than Singapore itself. The bus companies can take in these big packages while ensuring that it is operating at sustainable profit levels, because of the big market.

In Singapore, it's different. Market is too small, and so the size of route packages have to be considered properly in order to make it at least not loss making. If there are too many small fragmented packages for too many players, everyone will have a very small share of the small market, which in the end, everyone is making losses and eventually all may quit the market. It is also very messy and hard to keep track of service standards if there are too many different players to manage as the whole system. 

 

 

Temasek only got minority share in Grab (which is still a Malaysian company btw) so don't think they will have much say in purchase.

 

I'm not sure what owning a taxi company would do for Grab. They're only an app platform and don't really own any vehicular assets (the cars all rental from other companies), so having SMRT's taxis would only be additional financial burden with no relevant increase in income.

 

 

One option is Grab to work with HDT to acquire SMRT taxis. HDT will take over the vehicular assets and at the same time can expand its fleet (smallest in Singapore), while teaming up with an hire app platform, Grab, to boost its business. Grab, at the other hand will have some control over taxi hiring business using HDT, without incurring costs on vehicular assets.  

Edited April 23, 2017 by DACH