FT: Pavel Durov’s arrest may prevent Telegram from going public by 2026

What’s new? Financial Times journalists have published an article where they called Pavel Durov’s potential 10-year prison sentence disastrous for Telegram, which he founded, as the messenger is actively preparing to list on the stock exchange via an IPO by 2026. The FT noted that Telegram is trying to achieve financial sustainability and self-sufficiency by ramping up monetization efforts through paid subscriptions and advertising offers.

Material by FT

What else is known? According to the data that got into the hands of FT Telegram’s financial statements for 2023, the company’s revenue amounted to $342 million, operating loss, of $108 million, and total losses after taxes of $173 million.

As the reporters clarify, Telegram is wholly owned by Durov, who is a cryptocurrency multibillionaire, but the messenger has previously raised $2,4 billion in debt financing that expires in 2026.

This includes a $1 billion bond offering in 2021, which included Abu Dhabi government funds, as well as a $330 million offering earlier this year. The 2023 report says Durov personally bought at least $64 million worth of Telegram bonds.

Under the terms, bondholders will be able to convert the underlying unsecured debt into equity at a discount to the IPO price if the listing takes place before the end of March 2026, an incentive for the company to go public before that date.

The price of the bonds fell nearly ten percentage points, from 96 cents to 87 cents, after Durov’s arrest on August 24, the reporters noted. One holder said anonymously that he had not received any communication from the messenger’s team after the arrest of its head.

The messenger is also closely tied to the TON blockchain and its native cryptocurrency Toncoin — it was the Telegram team that originally developed the project. Now, Telegram offers many TON-based blockchain games and services in the format of mini-apps, and the internal Telegram Wallet bot supports Toncoin.

In 2023, Telegram’s financial losses were partially offset by an increase in the value of digital assets on its balance sheet, which approached $400 million. Already in 2024, the company sold Toncoin for more than $244 million. In addition, after Durov’s arrest, Toncoin’s exchange rate momentarily collapsed by nearly 20%.

“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,” the journalists write.

Earlier this year, in an interview with FT, Durov said that the company has almost zero turnover, and all employees — 50 people, 30 of whom are engineers — share common values and believe in the company’s mission. The entrepreneur noted that not a single feature in Telegram is launched without his active participation.

At the time, Durov said he was pushing ahead with plans for an IPO after rejecting offers from potential investors who valued Dubai-based Telegram at more than $30 billion.

Now experts interviewed by FT say going public could be complicated by advertisers shunning a platform suspected of aiding and abetting the distribution of child pornography, and bondholders facing substantial losses.

Durov, who has French citizenship, was arrested on arrival in Paris from Azerbaijan and held without charge for the maximum possible period, four days, before being placed under judicial supervision and banned from leaving France while the investigation continues. For this purpose, the authorities took a bail of 5 million EUR, confiscated all of the entrepreneur’s passports, and obliged him to regularly report to the police.

Durov has already been charged with several offenses, the term for only one of which can reach 10 years in prison. In question is complicity in illegal transactions in the framework of organized crime group in the administration of the online platform.

The businessman was also accused of refusing to hand over data to law enforcement, complicity in the distribution of child porn, drug trafficking, transfer of hacker software, fraud as part of an organized crime group, and assisting in evading responsibility for crimes as part of an organized group.

Other charges include providing a cryptographic tool without prior declaration and supplying and importing a cryptographic tool that does not exclusively provide authentication or integrity control functions without prior declaration.

Already after Durov’s arrest, authorities in India and then Indonesia began investigating Telegram. Officials from both countries noted that the detection of illegal content in the messenger could lead to its blocking. At the same time, India is the first country in the world by the number of Telegram users (104 million), and Indonesia is in third place (27 million).

Restricting the messenger’s operation in these countries will lead to a significant drop in the active user base, which crossed the 950 million mark in July.