Telegram Stalled on $300M xAI Agreement – What’s Causing the Delay?

The cloud-based messaging platform Telegram is currently facing challenges as it attempts to secure funding through a debt issuance. A notable aspect of this effort includes a pending agreement worth $300 million with xAI, the artificial intelligence firm founded by Elon Musk.

A recent exchange on social media between Telegram’s founder, Pavel Durov, and Musk indicates preliminary approval of the deal, although the official documentation has yet to be finalized. Durov’s announcement, made on Wednesday, did not specify that formal agreements were still necessary.

Is There a Partnership Between Telegram and xAI?

On May 28, Durov shared on social media that by summer 2025, users would have access to Grox, xAI’s generative chatbot, which he touted as top-tier technology. He mentioned having come to terms with Musk on a year-long collaboration to integrate Grox throughout all Telegram applications.

This partnership is expected to bolster Telegram’s financial health, as xAI is set to provide $300 million in a combination of cash and equity. Furthermore, the arrangement dictates that Telegram will receive half of the revenue generated from subscriptions to xAI services sold through its platform.

Durov emphasized a spirit of collaboration, stating, “Together, we win.”

In a timely follow-up, Musk engaged with comments on the announcement, clarifying that no official paperwork had been executed regarding the deal. Durov affirmed Musk’s point, noting that while the agreement was viable in principle, all formalities still needed to be addressed.

The $1.5 Billion Bond Initiative

The discussion surrounding the $300 million agreement comes as Telegram is pursuing a substantial $1.5 billion through a five-year bond initiative supported by major financial institutions, including the asset management firm BlackRock, Abu Dhabi’s Mubadala sovereign wealth fund, and the hedge fund Citadel. BlackRock and Mubadala currently hold bonds, whereas Citadel is a new participant in the investment round.

Reports indicate that the bonds will be offered with a yield of 9%. Investors will have the choice to convert their debt into shares at a discounted rate if Telegram decides to go public.

The funds raised are intended to facilitate a buyback of outstanding debt from bonds issued in 2021, which are set to mature in March 2026. The company has already utilized $400 million of its resources to repurchase a portion of those bonds.

Amidst these developments, Toncoin (TON), the cryptocurrency associated with The Open Network (TON), founded by the Telegram team before operating independently, has seen fluctuations attributed to the xAI situation. After Durov’s announcement, the coin experienced a 23% increase from $2.98 to $3.69, but Musk’s counter-response caused an 11% drop to $3.27 at the time of this report.