Telegram's substantial commercial operations are subject to scrutiny
The company managing the controversial chat application Telegram is entirely centered around its CEO and creator, Pavel Durov. Legal proceedings against Durov in France could potentially become a financial predicament for the corporation. Doubts are emerging among investors regarding the scheduled IPO.
Just a short while ago, Durov announced that potential investors had estimated Telegram's worth to be exceeding 30 billion euros. Instead of incorporating these investors, Durov settled for a future IPO to settle the company's debts. However, due to the investigations and Durov's temporary detainment in France, potential investors and shareholders are now uncertain if an IPO can be launched successfully as scheduled next year.
Durov was taken into custody last week upon entering French territory and was held captive for several days. As Telegram's director, authorities accuse him of multiple alleged legal infractions committed by the app, including insufficient assistance in combating child pornography. He stands to face up to a decade in prison. Currently, Durov is out on bail but is temporarily prohibited from leaving France.
The investigations have taken a significant toll on both Durov and Telegram. The corporation is still searching for ways to monetize its expanding user base. It has introduced premium features, primarily for businesses employing the app, and has started exhibiting advertisements in certain nations. However, the association with unlawful content, specifically child pornography, which is now the core focus of the French investigation, may dissuade numerous advertisers, disclosed a confidential source to the FT. This, in turn, would make it more challenging to stimulate investor enthusiasm for the IPO.
Telegram bond value nosedives
If Durov should be found guilty and imprisoned, the consequences for Telegram would be challenging to foresee. Without its CEO, nothing functions within the company, as Durov himself once stated. He is involved in every critical decision, and no application feature is launched without his involvement.
Last year, Telegram reported a loss of 174 million dollars, as per the FT. So far, Durov has declared his ambition to make the company profitable this or the following year. Although Durov could probably endure more significant losses, the native Russian, who now also holds French citizenship, has a fortune in the billions, primarily from cryptocurrencies. However, Telegram needs to redeem bonds worth approximately 2.4 billion dollars by 2026, which the corporation has issued in recent years.
If the IPO transpires by 2026, bondholders might convert their billion-dollar obligations into Telegram shares at a discounted price. However, if Telegram were to be labeled as unfavorable, investors might exhibit little interest in its shares, quoted one of the bondholders by the FT. Following Durov's arrest, the value of the bonds plummeted by more than ten percent on the stock exchange.
The telegram about the potential IPO schedule next year has caused uncertainty among investors due to the legal proceedings against Durov. In light of the investigations, the value of Telegram's bonds has decreased significantly on the stock exchange.
