In an exclusive interview with the Financial Times, Pavel Durov, the owner of Telegram, disclosed that the encrypted messaging application is on the verge of achieving profitability. Still shrouded in some secrecy, the Dubai-based firm is planning an impressive initial public offering (IPO) as the user base nears 900 million, up significantly from 500 million early last year.
Durov, who was born in Russia, founded the app in 2013 in an act of free-speech advocacy. Prior to this, he was celebrated as Russia’s answer to Mark Zuckerberg for co-establishing VKontakte, Russia’s most-used social media platform. In an unfortunate turn, he was forced to leave Russia in 2014 after declining to disclose the data of Ukrainian VK users to the Russian security agency. The sale of his VK shares to oligarchs allied with the Kremlin netted him $300million; a sale made under pressure, he claimed.
Since its founding, Telegram has generated extensive revenues reaching “hundreds of millions of dollars” in the wake of premium subscription and advertising services launched two years ago. Durov stated, “Our goal is to be profitable, possibly as early as this year, if not then certainly the next.”
Last year, the company amassed approximately $2 billion (€1.8 billion) in debt financing. This included a $1 billion bond offering in 2021, followed by issues amounting to $750 million that same year and $270 million last year. Yet, he clarified that selling Telegram was not an option as they consider an IPO, “We’ve chosen to monetise to maintain our independence. An IPO could democratise access to Telegram’s value.”
From being the hub of the volatile cryptocurrency scene, Telegram has grown in usage over the years, becoming the go-to communication channel for governments and officials worldwide, particularly of benefit to citizens in areas of conflict. However, concerns over the platform harbouring criminal activities and disinformation, owing to its lax moderation, persist. Critics have raised suspicions of the Kremlin’s potential influence over Telegram, but Durov dismissed these as “inaccurate”.
Sources close to Telegram have mentioned that a US listing could potentially be in the cards once Telegram achieves profitability and the market conditions are suitable. Although Pavel Durov, the company’s founder, declined to provide any specific timeline or potential venue details, he did make clear that various options had been assessed by Telegram.
The company took on around $2 billion in debt financing, inclusive of a $1 billion bond offering in 2021, and two additional issuances of $750 million and $270 million in the same year. The bondholders are presented with the option to convert their senior unsecured debt into equity at a discount of 10 to 20 per cent to Telegram’s IPO price if it is floated before March 2026’s end.
During an Initial Public Offering, Durov highlighted that they would think over offering a stock allocation to dedicated users, similar to what Reddit, which unveiled its plans to distribute a portion of its shares to retail investors in anticipation of a New York listing.
There have been expressions of interest, Durov noted, to perform a smaller equity raise. This might be a viable option should they need to procure funds, for instance, to drive their aspirations related to artificial intelligence. The firm is currently looking at the possibility of using an AI-driven chatbot.
WhatsApp, their competitor under Meta’s ownership, has about 1.8 billion monthly active users whilst Signal has 30 million based on Sensor Tower’s data up to February 2024, which only includes mobile app users.
Durov stated that its annual expenditure comes in at under 70 cents per active monthly user. As a revenue-generation exercise, Telegram has conducted ad testing in specific locations, setting a minimum spend of between €1 to €10 million for each advertiser or agency. Expansion plans for this year include a global rollout and providing access to smaller advertisers via automated systems.
This month, they will roll out a programme to share revenue with creators managing their channels, pledging them a 50% share of the marketing revenue. They are also launching business accounts together with a feature known as “social discovery.”
Nevertheless, Telegram’s push for advertising revenue contrasts with its image as a platform that resists moderation, as highlighted in recent criticisms for permitting sensitive Hamas-related content.
Durov has announced that Telegram is set to enhance its moderation techniques in line with various global elections taking place this year, with a specific focus on the employment of AI-related approaches to mitigate potential issues. However, Durov maintains Telegraph’s focus on freedom of speech, asserting that, providing there is no crossing of boundaries, there should be no need to regulate individual expression. Durov places value on the contest of ideas and encourages that every concept be open to scrutiny. He warns against the risk of diving into authoritarianism if not. – Copyright claims held by The Financial Times Limited 2024
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