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Secret messaging app Telegram claims it is close to breaking even and announcing itself. Dangling the possibility of an IPO helped it secure more favorable borrowing terms. However, in keeping with the company's anti-surveillance narrative, financial details are sparse.
Does co-founder Pavel Durov really want to run a public company? He has previously used his own wealth to fund Telegram and wants to maintain control. Choosing debt rather than raising money for equity means he can avoid diluting ownership, even though it adds a benefit to the company's overall expenses. Previous investor demand may not have been high. Last year he bought a quarter of the bonds he issued himself.
In mid-March, Telegram announced it had raised another $330 million from a bond sale, bringing its total debt financing to $2.3 billion since 2021. Once again, a potential IPO was used as a sweetener. The bonds could be converted into shares at a discount from the IPO price if there is a listing by March 2026. The company talks about a potential valuation of $30 billion, but does not provide any details to support that.
Durov, formerly known as Russia's Mark Zuckerberg, 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 guidelines for online privacy and security.
Taking the company public would change the power structure and force greater disclosure, although Durov could maintain voting control by issuing dual-class shares.
Monetizing messaging apps is not easy. Users don't want ads to appear in their direct messages. Signal relies on donations and Meta does not provide revenue numbers for WhatsApp.
Telegram is not profitable yet. It told the Financial Times that it generates “hundreds of millions of dollars” in annual revenue via digital advertising, cryptocurrency payments and premium subscriptions. She's planning to create an AI chatbot, but who doesn't? Server costs are significant. Durov described the costs as less than 70 cents per user, which equates to about $630 million annually. Revenues are less than that.
The sale of tokens tied to its own blockchain efforts could have funded the endeavor, but was rejected by regulators. However, Telegram is still facilitating the use of tokens, called Toncoins, after developers took over the project. The price of Toncoin has risen by about 60 percent in the past year. Talk of an IPO has proven to be profitable in more ways than one.
elaine.moore@ft.com
