Telegram’s financial future in doubt as chief faces criminal inquiry
Telegram’s hopes for a lucrative IPO within two years have been hit by the criminal charges brought against the messaging app’s chief executive, as the company’s bondholders suffer steep losses over the events of the last few days.
Pavel Durov faces a litany of preliminary charges in France over Telegram’s alleged failure to address criminality on the app, including one punishable by up to 10 years in prison.
The Russia-born billionaire, who is now a French-Emirati citizen, has been freed from custody on bail but is now barred from leaving France.
The development is catastrophic for Dubai-based Telegram and its elusive chief executive, who has been trying to expand the business ahead of a possible stock market listing by 2026.
Durov had been ramping up monetisation efforts, introducing nascent subscriptions and advertising offerings in a bid to become “self-sustainable financially”.
Telegram’s 2023 financial statements, seen by the Financial Times and not previously reported, show that the company made $342mn in revenues last year on an operating loss of $108mn. Total losses stood at around $173mn after tax.
Durov told the Financial Times in March he was pushing forward with IPO plans, after rebuffing approaches from potential investors who he said gave the Dubai-based company “$30bn-plus valuations”.
But experts warn that any listing would struggle if advertisers prove reluctant to spend on a platform now linked to alleged child sexual abuse material. “Then you’re going to be left with crypto scams and rapid weight loss adverts,” said a person familiar with the business.
Telegram is fully owned by Durov, who sits on a multibillion-dollar cryptocurrency fortune, but the company has raised about $2.4bn in debt financing set to mature in 2026.
This includes a $1bn bond offering in 2021 where Abu Dhabi state funds were among the investors. Most recently, $330mn was secured earlier this year in an issue Durov has said was oversubscribed.
Durov has personally bought at least $64mn in Telegram bonds, according to the company’s 2023 financial statement, as part of what he has previously described as investing “hundreds of millions” into Telegram’s growth.
The price of Telegram’s bonds have fallen by nearly 10 percentage points, to trade at around 87 cents on the dollar, yielding over 16 per cent, down from around 96 cents prior to his arrest on Saturday after he landed at an airport outside Paris on a private jet.
Under the terms, Telegram’s bondholders will be able to convert the senior unsecured debt into equity at a discount to Telegram’s IPO price if a listing takes place before the end of March 2026 — an incentive for the company to list before that date.
“Would investors buy into an IPO if they are not sure if Telegram is [a] pariah? I am not sure. Bond investors would face a similar dilemma,” said one bondholder, adding that private equity investors might seize the opportunity to buy the company at a discount. “In either case, I would not expect a quick recovery of the bonds.”
One bondholder said that they had not received any communications from Telegram in the wake of the news of the arrest.
The company is closely associated with Toncoin, a cryptocurrency that was initially developed by the Telegram team and drew in individual and institutional Russian investors, among others.
In 2023, Telegram’s financial losses were partially offset by an appreciation of the digital assets it holds on its balance sheet, which were worth nearly $400mn that year in total. Meanwhile, in 2024, the company also sold Toncoins for over $244mn in cash, financial documents show.
However, the company’s digital assets have been hit by the arrest in France, with Toncoin trading down nearly 20 per cent in the wake of the news.
Going forward, it remains unclear how Durov will continue to operate the platform, or whether that task will fall to a small cluster of loyal lieutenants at a company known for its cult-like culture.
Durov has said that the company only has around 50 employees, including 30 strictly-vetted engineers. He said picked his team by hosting programming competitions and then trying to woo the winners, adding that they were mainly coders from Ukraine.
A person close to the matter described staffers as typically being “super-young”, plucked from eastern Europe, offered annual salaries of half a million dollars, and soon posting photographs of their Porsches on social media.
“There is practically zero churn,” Durov told the FT earlier this year. “They share the same values and believe in the mission of the company.”
He is central to the decision-making, describing the pace of innovation as closer to a start-up despite having nearly 1bn users. “I don’t like to view myself as co-director, the owner or whoever. I like to view myself as a product leader,” he said. “No feature is launched without my deep involvement.”
The centralised leadership style raises questions about “whether Telegram can exist without Pavel”, said Aleksandra Urman, a researcher at the University of Zurich and social media expert.
Durov has long advocated a “hands-off” approach to moderation in the name of free speech and libertarian ideals. Telegram says on its website that it has disclosed “0 bytes of user data to third parties, including governments” as a point of principle.
The company did not issue any statement immediately following the charges or respond to requests for comment for this story.
After Durov’s initial arrest, the company said he had “nothing to hide”, adding that it was “absurd to claim that a platform or its owner was responsible for abuse of that platform” and that its moderation was “in line with industry standards”.
Additional reporting by Adrienne Klasa in Paris, Ahmed Al Omran in Jeddah and Euan Healy in London