Telegram Contemplates Raising Over $1 Billion To Service Debt

Messaging service and social media platform, Telegram, has decided to issue investors $1 billion to $1.5 billion of company debt, with the promise of discounted equity if the company eventually goes public.

The Dubai-based Russian who owns Telegram, Pavel Durov has also announced plans to start selling ads in public Telegram channels as soon as later this year as well as offering other premium services for business and users. the people briefed on the plans said.

Telegram may be in debt of roughly $700 million by the end of April, according to people briefed on the company’s plans and loan documents viewed by the Wall Street journal.

Telegram Group Inc. must cover rising equipment and bandwidth expenses because of its rapid growth, despite going years without attempting to generate revenue.

The messaging service is one of the few significant social- media challengers to Facebook Inc., on a trajectory toward one billion users active each month by the end of 2022, up from roughly 550 million today.

READ ALSO: Telegram Records Milestone Of 500 Million Users

Durov needs to figure out how to convert the telegram social media app’s usage into a self-sustaining business.

“A project of our size needs at least a few hundred million dollars per year to keep going,” Mr Durov wrote in his public channel on Telegram late last year.

“While doing that, we will remain independent and stay true to our values, redefining how a tech company should operate.”

A Telegram spokesman declined to comment on the bond issue or the amount of debt the company has due. The spokesman said Telegram’s equipment and bandwidth costs are growing because it has consistently posted more than 40% year-to-year growth in users.

Telegram offers public-facing channels, which are something like a cross between Twitter feeds and chat rooms, as well as encrypted communications that are private.

The Telegram spokesman said the company’s ad strategy is likely to focus initially on Asia, Eastern Europe and the Middle East. He added that Telegram has a working relationship with Apple and Google for content moderation.

Telegram may have to convince advertisers that its audience is broad, to enable the messaging app to get favourable ads to service the debt and sustain the business.

Durov will also have to satisfy Apple Inc. AAPL +1.36% and Alphabet Inc.’s GOOG -0.69% Google—whose app stores control most of Telegram’s distribution—that the app can rein in threats of violence and coordination of illicit activities such as weapons and drug sales.