Does Telegram really want to go public?
Secretive messaging app Telegram claims that it is inching closer towards breaking even and going public. Dangling the possibility of an initial public offering has helped it secure more favourable borrowing terms. In keeping with the company’s anti-surveillance back-story, however, financial details are sparse.
Does co-founder Pavel Durov really want to run a public company? He has previously used his private wealth to fund Telegram and wants to maintain control. Opting for debt over equity fundraising means he can avoid diluting ownership, although it adds interest to the company’s overall expenses. Previous investor demand may not have been high. Last year he purchased a quarter of the bonds issued himself.
In mid-March, Telegram announced that it had raised a further $330mn in a bond sale, taking total debt financing to $2.3bn since 2021. Once again, the potential IPO was used as a sweetener. Bonds can be converted to equity at a discount to the IPO price if there is a listing by March 2026. The company talks up a possible $30bn valuation but offers no details to back this up.
Once hailed as Russia’s Mark Zuckerberg, Durov created Telegram in 2013. He left Russia the following year after refusing to share data with the country’s security agency. His exile plays an important role in Telegram’s origin story, reinforcing its guiding principles of privacy and security online.
Taking the company public would change the power structure and force greater disclosure, although Durov could maintain voting control by issuing dual class shares.
Monetising messaging apps is not easy. Users do not want adverts to pop up in their private messages. Signal relies on donations and Meta does not give profit figures for WhatsApp.
Telegram is not yet profitable. It told the FT that it makes “hundreds of millions of dollars” in annual revenue via digital ads, crypto payments and premium subscriptions. It is planning an AI-powered chatbot, but then who is not? Server costs are large. Durov described costs as less than 70 cents per user, which translates to around $630mn a year. Revenue is below that.
Selling tokens linked to its own blockchain effort could have funded the endeavour but it was shot down by regulators. However, Telegram still facilitates use of the tokens, called Toncoins, after developers took on the project. Toncoin’s price has climbed about 60 per cent in the past year. Talk of a possible IPO is proving lucrative in more ways than one.
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