In September, it will be four years since Flag (Fibre Links Around the Globe) came back from the dead.

The subsea cable operator, then known as Global Cloud Xchange (GCX), had filed for bankruptcy in 2019 with debts of $350 million. In 2021, GCX reemerged, before being snapped up by investment firm 3i Infrastructure in September 2022 for $512 million.

“I’ve been at Flag now for six years as of July, when it had just come out of bankruptcy,” says Carl Grivner, CEO, Flag. “Since then, we reshaped it, rebuilt it, and then we sold it to a private equity firm here in London.”

Flag owns one of the world’s largest private subsea fiber optic networks and provides end-to-end high-speed digital connectivity solutions, including colocation capacity, dark fiber, and Layer 2 and 3 services for hyperscalers, telcos, OTT content providers, and enterprises across its interconnected platform of seven subsea and six terrestrial cable systems.

Planting the Flag

A part of the company’s revival has been its rebrand, which was announced in April of last year. Flag’s previous name was a point of contention, Grivner says.

“It’s quite comical,” he laughs. “The original name was Global Cloud Xchange, which was then translated into GCX… a lot of the OTT players hated it,” explains Grivner. “It was a ‘wait a minute, you’re not in the cloud business and not in an exchange in any way, so why are you called GCX?’ It was a painful discussion to have.”

It’s from here that Flag was the obvious choice, says Grivner, who noted the name’s prominence within the industry resonates with people.

The company now shares its name with several of its subsea cables, including the FLAG Europe-Asia, FLAG-Atlantic, and FLAG North Asia Loop systems.

“We decided to go back to Flag, which was a historical and very successful brand in the industry,” says Grivner. “When you’re at events, it seems like everybody worked at Flag at one point or another. People cherish the little memorabilia, such as the pins you put on your jacket, or the silly socks that say Flag and things like that.”

Grivner knows a thing or two about what makes a successful brand. He was previously CEO of Colt Technology Services for four-and-a-half years, and has also served as chief executive of Singapore-based telco Pacnet.

Growing out its terrestrial focus

In total, Flag’s subsea cable network covers 66,000km (41,010 miles), from North America to Asia. It offers capacity on the FA-1, HAWK, Falcon, MEDEX, FEA, IEX, and FNAL systems, and operates and/or arranges capacity at cable landing stations in Taiwan, Japan, France, the UK, and the US, as well as offering modular data center services.

Last year, Flag also acquired capacity on Google’s Echo cable, snapping up a fiber pair on the route that connects Singapore to the US via landing stations at Eureka, California; Piti, Guam; and Changi, Singapore.

Grivner explains that while the company’s focus has traditionally been subsea cable routes, there’s more of an interest to grow out its terrestrial footprint. Those fiber assets link the company’s subsea assets directly to terrestrial networks, data centers, and cable landing stations across Europe, the Middle East, and Asia.

“The business right now is about 90 percent subsea and 10 percent terrestrial, and we’re changing that model to about 60-40,” he adds, pointing to the opportunities that lie in the data center market.

“We’re currently adding routes in Iraq and Saudi Arabia, and we’ll continue to add more terrestrial routes as we see fit.” He argues that this will provide data centers in the region with more redundancy.

According to Paul Abfalter, chief strategy and revenue officer at Flag, the end of 2026 will have seen the company invest $250 million since being acquired by 3i Infrastructure in 2022, with the cash spent on Flag’s network and new capabilities.

“With 3i’s leadership, we’re looking to dramatically change the way that the business is architected from the network architecture point of view, as well as obviously investing in a whole bunch of new systems and capabilities to make it a bit more ready for the AI era,” explains Abfalter.

AI demands reshape subsea connectivity

Since joining the company in 2020, the backdrop of the telecoms world has changed, explains Grivner, with the focus shifting from cloud to AI.

“I’ve been around technology for a long, long time, and I’ve seen different waves come and grow,” he says. “Around the 2020 time-frame, a lot of the growth from a Flag perspective was driven by cloud and the rollout of cloud. And in the last 24 months, it’s been driven by AI.”

The emergence of AI has led to a huge demand for subsea cable capacity.

According to Grivner, AI workloads have altered expectations and demands for bandwidth, claiming that this demand is up 10 times compared to a cloud perspective.

“The AI boom is here,” Grivner says. “It’s an arms race amongst all of the providers to come up with the best latency, the response times, the redundancy, the diversity, the capacity in terms of network, and we’re at the beginning of that.”

Adding to this, Abfalter says that the demand for AI is putting pressure on the need to develop more routes, such as inter-region routes, rather than focusing necessarily on just long-haul networks.

Route diversity

The need for more cable capacity ties into the need for more diverse connectivity. The changing geopolitical landscape means offering a variety of routes has never been more important.

While subsea cable operators such as Flag have always had to contend with accidental damage to their cables, there are more severe challenges to deal with. Recent instability in the Middle East has brought this discussion to the fore, with various technology companies seeing their infrastructure across parts of the region attacked. Data centers have been targeted in parts of the region, with facilities operated by AWS and Oracle apparently being hit by drone strikes.

The unrest is being closely monitored by the subsea cable industry as well, with ocean infrastructure regularly targeted as a means of disrupting communications, particularly as uncertainty continues around the Strait of Hormuz, which has been subject to various barricades and threats of military action.

“We have not seen any impact to connectivity at this point in time,” Grivner tells DCD when asked if Flag has noted any consequences of the war. The company has cables spanning parts of the Middle East, including its Falcon and FEA routes.

While the disruption has been minimal so far, the conflict has highlighted the need for route diversity, adds Grivner, who says the need for a ‘Plan B’ route is essential for customers.

“There’s a need for diversity and redundancy in the Middle East right now, with the concerns about different locations being threatened or weakened,” says Grivner.

“With the diversity of routes that we’re built, building in from a terrestrial perspective, we have ways of circumventing if a break were to happen in a particular location, I think that’s going to be the norm. That’s why I say I don’t think anybody’s going to be purely a subsea business anymore. I think the balance between both subsea and terrestrial is going to be an important element of success moving forward.”

Abfalter tells DCD that the uncertainty in the region has paused building projects.

“The concern for us is that it slows down and pauses some of the build projects, including, obviously, some of the build projects in the Gulf and some of the projects that we’re all working on, so that part is painful,” he says.

Flag is keen to plant its flag in more locations, with Grivner identifying further routes. He says that there are opportunities for more routes between Singapore and Australia to the US, plus demand for India to Europe, while intra-Asia will be important for the firm.

Grivner, however, does appear to rule out more routes across the Atlantic, for now.

“I haven’t mentioned the Atlantic and won’t,” he says. “We think our bread and butter is primarily in the other part of the world. I’m not saying the Atlantic is saturated, but we’re just seeing the demand from the other side of the world right now.”

Meanwhile, Abfalter anticipates that there are more terrestrial opportunities in the Middle East for Flag, notably in Saudi Arabia.

In June of last year, the company secured a $340m refinancing package, stating at the time it was “set to announce significant investments from Asia to Europe and throughout the Middle East.”

“We’re definitely seeing big investments in Saudi Arabia in making that terrestrial path happen, which will become the main path of the Red Sea,” he says. “We’re stepping up our presence in Iraq as well, and in Syria as things continue to stabilize there. You’re going to see that pop up as an important terrestrial market.”

Middle Eastern Edge

It’s not just new routes that Flag is hoping to connect, the company has also got its eyes on expanding its Edge data center presence.

Flag owns and operates some small modular Edge data centers, including a deployment in Japan. The company declined to reveal publicly how many of these Edge data centers it operates. Grivner says that it hopes to build more of the data centers across the Middle East, in line with its plans to grow its presence in the region.

“We’re looking to expand, with more of those in the Middle East,” he says. “We see this as part of the data sovereignty and [lower] latency opportunities,” he says. Given their modular nature, it is no surprise that Grivner says Flag’s upcoming data centers will not offer gigawatts of capacity. “They’ll be in the 5MW-20MW size, modular units that we can build and transport to a customer location in just a few months,” he explains.

These Edge data centers offer an alternative to deploying the larger 100MW data centers that may not be appropriate for a certain location, as demand grows for data closer to the Edge.

When it comes to AI, Grivner says Flag needs to build for the future, while keeping pace with the rapid changes the industry is in the midst of.

“I used to say that telecoms was about 10 years ahead of its hype,” he adds. “Now it’s more like 10 months ahead of its hype in terms of how fast things are rolling out.”