Famous social network of the ‘Russian Mark Zuckerberg’ considers going public

Telegram currently has over 900 million users and is approaching profitability, said the owner of the secret messaging app, as the company nears a potential IPO.

Pavel Durov told the Financial Times that Telegram, headquartered in Dubai, has grown into one of the world’s most popular social media apps, earning ‘hundreds of millions of dollars’ after introducing advertising and premium subscription services two years ago.

– We hope to become profitable next year, if not this year – said the Russian founder in his first public interview since 2017. He added that the platform has as many as 900 million active users monthly, compared to a significantly smaller 500 million at the beginning of 2021.

Durov, who is the sole owner of Telegram, said the company has been ‘offered a valuation of over $30 billion’ from potential investors, including ‘global late-stage tech funds’, but ruled out the possibility of selling the platform while exploring a potential IPO.

– The main reason we started monetizing is that we wanted to remain independent. Generally speaking, we see value in an IPO as a means to democratize access to Telegram’s value – he said.

Forced Sale

Interestingly, Telegram, which gained fame as a refuge for millions of cryptocurrency investors, currently has only about 50 permanent employees. This number is even more interesting given that the platform has grown into a very important communication tool for governments and officials globally in recent years, as well as the only platform actively used by citizens of war-torn countries.

However, numerous experts warn that it is a platform that remains a breeding ground for criminal activities, as well as extremist or terrorist content and misinformation. For this reason, some have suggested that the Kremlin may have connections or influence over Telegram, but Durov dismissed those claims as inaccurate.

Durov was dubbed ‘the Mark Zuckerberg of Russia’ after founding the country’s most popular social network, VKontakte (VK), in his hometown of St. Petersburg in 2007.

A well-known advocate for free speech, he co-founded Telegram with his brother in 2013 and fled Russia a year later after refusing to share data on certain Ukrainian VK users with the Russian security agency. Durov said he was forced to sell his stakes in the platform to Kremlin-friendly oligarchs for $300 million.

Anonymous sources who spoke to the FT said that Telegram is likely to aim for a listing on the US stock exchange after the company achieves profitability and market conditions are favorable. Durov declined to comment on the timeline or possible location, but said that Telegram has ‘explored several options’.

It is worth noting that Telegram has raised about two billion dollars in debt financing, from a one billion dollar bond offering in 2021, as well as further issuances of 750 million dollars that year and 270 million dollars spent last year.

Bondholders will be able to convert older unsecured debt into equity at a discount of between 10 and 20 percent relative to the price of Telegram’s IPO if the exit occurs before the end of March 2026, which is an incentive for the company to do so before that date.

Durov also said that when going public, Telegram will consider selling shares to loyal users, following Reddit’s recent announcement that it will allocate part of its shares to small investors before its IPO in New York as early as March. He added that he was interested in a smaller capital increase.

Ambitious Plans

– This remains an option if we wanted to raise funds, for example, to boost our ambitions related to artificial intelligence – he said, adding that the company is exploring the possibility of introducing chatbots powered by artificial intelligence.

Messaging rival WhatsApp, owned by Meta, has 1.8 billion active users monthly, while the encrypted communication app Signal has 30 million as of February 2024, according to Sensor Tower analysis, although this data only covers mobile app usage.

Annual costs were less than 70 cents for each monthly user, Durov said. As part of its efforts to generate revenue, Telegram has tested advertising in certain regions, requiring a minimum spend of between one and ten million euros per merchant or agency. This year, it plans to expand its offering globally and to smaller advertisers using automated systems.

The company will introduce revenue sharing with creators who run its channels this month, promising them 50 percent of marketing revenue. Additionally, it is also introducing business accounts and a ‘social discovery’ feature, which will help users meet or date people nearby, Durov said.

Telegram’s dollar advertising offer contrasts with its reputation as a rogue platform with a hands-free approach to moderation, which recently drew attention for allowing some content related to Hamas to remain on the platform.

Durov said that Telegram plans to improve its moderation processes this year as numerous global elections take place and ‘introduce AI-related mechanisms to address potential issues’.

But ‘unless they cross red lines, I don’t think we should control people in the way they express themselves,’ Durov said. – I believe in the competition of ideas. I believe every idea should be challenged… Otherwise, we can quickly degrade into authoritarianism – he concluded.