Surfing Champ Restores Some Luster to a Struggling Phone Company

(Bloomberg) -- Oi SA has been treading water in bankruptcy proceedings for 17 months, but the Brazilian phone carrier is finding some inspiration from the country’s top surfer.

Gabriel Medina, a front-runner in the World Surf League, will vie for his second title when the 2017 season wraps up this month in Hawaii. That’s good news for Rio de Janeiro-based Oi, one of Medina’s main sponsors, which was quick to celebrate his latest victory off the coast of Portugal at the end of October. “Oi invests a lot in surfing,” Medina said. “It’s awesome. I’m really pleased.”
Oi needs all the help it can get. The company has been bleeding customers, including more lucrative users on long-term contracts, for 12 straight quarters. As its networks sit neglected and Oi struggles under $19 billion in debt, surfing and skateboarding offer a cheaper sponsorship alternative than Brazil’s most popular sport: soccer.

The nature of surf contests, which last for days and only run in optimal wave and wind conditions, makes them more popular on mobile devices, making it an obvious fit with Oi’s wider business model. More Brazilians stream live surf competitions than any other nation, consistently surpassing the U.S. and Australia, said Bruno Cremona, Oi’s head of sponsorships and events.

“Oi may have identified the need to strengthen its image by looking for something new to show that it’s changing, leaving behind the outdated image of a company full of problems,” said Mauricio Turra Ponte, a professor of marketing and sustainability at the Escola Superior de Propaganda & Marketing in Sao Paulo.

Image aside, plenty of problems persist behind the scenes. Marco Schroeder, whose office was decorated with four autographed surfboards, quit as Oi’s chief executive officer on Nov. 24 after trying to reach a recovery deal with creditors while clashing with the board. Less than two months earlier, Oi’s chief financial officer also resigned.

The company lost 10 percent of its wireless users in the 12 months through September, and Schroeder had regularly warned that it needs to get out of bankruptcy protection and speed up investments in its network if Oi wants to stop the subscriber rout.

To that end, backing athletes like Medina as well as skateboarders helps keep Oi’s brand fresh among young consumers, said Cremona. Oi is expecting a pickup in viewership among Brazilians in December when surfers tackle Pipeline, the most famous wave on the planet, where a shallow reef on the north shore of Oahu island produces dangerous, tubular rides that have been a mainstay on surf-magazine covers since the 1960s.

“The company’s brand visibility is very large thanks to growth in the championship tour,” Cremona said.

While subscriber losses have continued, there have been recent signs of improvement in Oi’s results. Complaints to telecommunications regulator Anatel dropped 14 percent in the third quarter, and the company has managed to migrate clients to higher-priced plans, increasing its revenue per user.

Oi’s advertising strategy also includes pop culture personalities such as Whindersson Nunes, whose celebrity impersonations have made him the most-watched Brazilian on YouTube with 25 million followers.

Surfing allows Oi to stand out more than if it had invested in more mainstream sports with bigger sponsors competing for the spotlight, said Ponte, the marketing professor. The athletes themselves also project a wholesome image -- Medina regularly travels with his whole family to surf contests as far away as Fiji -- which contrasts with the counterculture overtones the sport has in the U.S.

“Medina’s image is very favorable. He’s handsome, well-behaved, he kisses his mom,” Ponte said. “Everyone would like to invest in a person like this.”

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net, Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net.

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net, Jessica Brice

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