“Oh, we got both kinds”, the waitress in the Blues Brothers movie explains to Jake and Elwood. “We got Country AND Western.”
At ECT, we can also offer both: CAPEX and OPEX, depending on what our customers need. CAPEX are capital expenditures, i.e. customers buy the whole platform with the product from us. We install a system, provide maintenance and the operator creates revenue with it. That’s a business model for customers that prefer to make a larger investment, pay for it in one go and then own the system with the value-added service they’re offering. It is the model most customers opt for.
But we wouldn’t be ECT if we were unable to help carriers who are reluctant to pay for an investment instantly and who want to see how business evolves. For these customers we offer OPEX, i.e. operational expenditures. Here, ECT owns the platform, installs it with the client and participates in the client’s revenue. We take part of the entrepreneurial risk and if the service works well, we and the operator benefit.
Pros and Cons of CapEx and OpEx
There are pros and cons for both models. It depends on the carrier’s business case, which approach works better. If you opt for CAPEX, you have invested in new equipment which on your books and has to be depreciated but at the end of the day it’s yours. Plus, it’s up to you to choose the level of service and maintenance that you think is necessary. It’s an additional service that we offer.
With an OPEX business model you won’t have additional equipment on your balance sheet. We charge a set up fee plus a monthly fee and provide maintenance. Critics of OPEX may say, you have to share a portion of the money you earn with the system, but at the end of the day, your investment is not particularly high and you not only share revenue with us but also part of the risk.
So, whatever your business case is, whatever your situation may be, we can offer a business model that meets your demands and is mutually beneficial at the end. We got both kinds; Country and Western.