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The growing capacity of Telegram is fast putting pressure on the company which keeps accruing costs to maintain its servers and network functionalities.
Telegram, a free, cross-platform, cloud-based instant messaging software and application service, has raised $1 billion with a convertible bond private placement. As reported by RBC, a Russian media outlet, this fundraising is the first time the platform will be placing its own bonds in the market, a necessity at a point when Telegram is in dire need of cash to cover its operational needs.
According to The Wall Street Journal, Telegram is owing to its creditors approximately $700 million, payable by the end of April, citing sources with knowledge of the company’s plans and reviewed loan documents. The $1 billion raised will help to meet this debt obligation while giving the company room to adjust to ways to monetize its ever-expanding platform.
The bond is a 5-year convertible deal with a 7% interest payable per annum and the minimum entry amount was pegged at $500,000. A major point of attraction for the investors is the ability to convert the bonds to shares, in advent that Telegram goes public through an Initial Public Offering (IPO). Per the terms, the converted shares will come at a 10% discount to the company’s placement price in the listing.
Telegram was the primary organizer of the bond placement with VTB Capital and Aton serving as the firm’s official agents in Russia. A source told RBC other managers were also free to help issue the bonds, but that it does not guarantee their clients will be admitted into the placement. Per the conditions of the bond issuance, the first coupon payment is billed for September 2021.
Telegram to Prioritize Fund Generation Following Bond Placement
The growing capacity of Telegram is fast putting pressure on the company which keeps accruing costs to maintain its servers and network functionalities. Following the bond placement, the next point of call will be to churn out innovative ways to generate revenue, in a bid to tilt the platform on the path of self-sustenance.
Pavel Durov, Telegram’s founder and financier has highlighted the need to generate funds in his earlier plans for the platform moving forward. As reported by Coinspeaker, Durov wrote in a note on his public channel back in December:
“As Telegram is approaching 500 million active users, many ask: who is going to pay for this growth? The more users you have, the higher are expenses for services and traffic. Meanwhile, the support of projects like ours costs hundreds of millions of dollars per year. During the major part of Telegram history, I paid the company’s bills myself. But with the current growth rates, Telegram is nearing billions of active users, which means corresponding expenses. When a tech company reaches this scale, it has only two options: to start earning money or be acquired by a larger company.”
Durov has reiteration his disinterest to sell the firm, and in the bid to generate funds, he noted that Telegram will creatively roll out innovative premium offerings to allow ads while maintaining free services for users who utilize the app as a simple messaging tool.