Criminal charges brought against Telegram head Pavel Durov in France have undermined the company’s hopes of conducting a profitable initial public offering (IPO). Holders of company bonds have already suffered huge losses due to the events of recent days.
Image source: t.me/durov
French authorities have brought a number of preliminary charges against Durov in connection with the reluctance of the Telegram administration to provide assistance in the fight against crime – one of them provides for imprisonment for up to ten years. Pavel is released on bail, but he is prohibited from leaving France. This is a real disaster for Telegram, which is nominally headquartered in Dubai as the company intended to expand its business ahead of a possible listing in 2026. Durov systematically developed the direction of monetization, introduced subscriptions and advertising in an attempt to make the project financially self-sufficient.
At the end of 2023, Telegram’s income amounted to $342 million with an operating loss of $108 million—after taxes, the platform’s total losses reached $173 million, writes the Financial Times. In March, the head of the company told the publication that he was counting on an IPO – at the same time, he rejected proposals from possible investors based on Telegram’s valuation of $30 billion. Now going public has become a difficult task, because advertisers may not want to deal with a platform associated with criminal cases cases under serious charges. Only crypto scammers and advertisements for quick weight loss will remain, experts worry.
Telegram is wholly owned by Pavel Durov, but the company has $2.4 billion in debt financing maturing in 2026. It includes $1 billion raised from bonds in 2021, including from Abu Dhabi government funds; as well as $330 million received this year. Durov personally bought Telegram bonds worth at least $64 million, according to the company’s financial report for 2023. Before his arrest last Saturday, the platform’s bonds were trading at $0.96 per $1; to date they have fallen in price to $0.87.
Telegram bondholders can convert the unsecured debt into shares at a discount to the IPO price if the listing occurs before the end of March 2026. Telegram’s financial losses in 2023 were partially offset by an increase in the value of digital assets on the company’s balance sheet – they are in total estimated at almost $400 million; In 2024, the company sold more than $244 million worth of the Toncoin cryptocurrency associated with the platform, but after the arrest of the head of the company, its price fell by almost 20%.
It is not yet clear how Durov will manage the messenger further: on his own, or his assistants will do it. The company, according to the general director, employs about 50 people, including 30 engineers who have passed a strict test – the team was recruited based on the results of programming competitions. These are mostly young talents from Eastern Europe who are offered salaries of $500,000 a year, and soon after joining Telegram, some of them post photos of their Porsches on social networks. Staff turnover, insiders say, is practically non-existent – employees share the company’s values and believe in its mission. All new Telegram features are released with the direct participation of Durov, and this raises the question of whether the platform can exist without him.
Pavel has always advocated a hands-off approach to moderation in the name of free speech; the platform’s website states that user data has never been disclosed to third parties.