No interest in “pariah”
Investigations are shaking Telegram's billion-dollar plans
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The company behind the controversial messenger app Telegram is tailored entirely to the boss and founder. The criminal proceedings against Pavel Durow in France could also become a financial problem for the company. Investors have doubts about the planned IPO.
Interested investors would have valued Telegram at more than 30 billion euros, the founder and sole owner of the messenger app, Pawel Durow, claimed just a few months ago. Instead of bringing these investors on board, Durow preferred to rely on a future IPO to pay off the loss-making company's creditors. However, in view of the investigations and Durow's temporary arrest in France, potential investors and investors doubt that such an IPO can be successful next year as expected.
Durov was arrested upon entering France last week and spent several days in custody. As Telegram's boss, investigators hold him responsible for numerous alleged violations of the law by the app, including a lack of cooperation in the fight against child pornography. He reportedly faces up to ten years in prison. Durow is now out on bail again, but is not allowed to leave France for the time being.
The investigation is a serious blow not only for Durow, but also for Telegram. The company is still at the beginning of its attempt to monetize a growing number of users, that is, to generate revenue with their help. On the one hand, Telegram has introduced paid premium functions, especially for companies that use the app. On the other hand, Telegram has started showing advertising in some countries. However, the connection to criminal content and particularly child pornography, which is now coming into focus in the French proceedings, is likely to deter many advertising customers, an insider from the company told the “FT”. This in turn would make it more difficult to attract investors to the IPO.
Value of Telegram bonds collapses
If Durow were convicted and sentenced to prison, the consequences for Telegram would be difficult to predict. Nothing works in the company without the boss. Durow once said that he was involved in every important decision. No function in the app was launched without his involvement.
Last year, Telegram posted a loss of $174 million, the FT reported. Up to now, Durow had set the goal of making the company profitable this year or next. Durow could probably compensate for even larger losses for a while. The Russian-born man, who now has French citizenship among other things, has billions in assets, primarily from cryptocurrencies. However, Telegram will also have to repay bonds worth around $2.4 billion in 2026 that the company has issued in recent years.
If the IPO takes place by 2026, bondholders could convert their billions in claims into Telegram shares at a preferential price. If Telegram became a “pariah”, investors would probably be interested in its shares, the “FT” quotes one of the holders of this bond. After Durov's arrest, the value of the bonds on the stock exchange fell by more than ten percent.
