CAPEX vs OPEX | difference between CAPEX and OPEX
This page compares CAPEX vs OPEX and mentions difference between CAPEX and OPEX. The full form of CAPEX is Capital Expenditure and OPEX is Operational Expenditure.
These are different procurement models. Both CAPEX and OPEX models are used by telecom operator. They have their pros and cons. To choose the right model for the operator both of these models need to be analyzed with respect to finance, operations and strategy.
The CAPEX based procurement model for green power was originally the ultimate choice, however since few years OPEX based procurement model has started getting importance. In OPEX model, the third party ESCO (energy service company) invests CAPEX amount. Here operator will pay for energy usage made.
Following table differentiates both of these approaches.
|Financial analysis||Operator need to invest all CAPEX (either its own or from market). Hence financial risk is with operator.||Operator need not have to invest for CAPEX. Hence there will be no financial risk to deploy.|
|Operational analysis||All the day to day regular operations are the responsibility of the operator. Here all cost associated to operations of the site is incurred by operator.||Here site operation is responsibility of ESCO, Operator need not have to deploy resources for the operation of the site. Operator pays only as per energy usage made at pre-defined rates.|
|Strategic analysis||maximizing utilization of available assets, multiple third parties engagement usually result into complex model for the operators to handle at the last mile.||Easy to control last mile performance as ESCO is the only last mile partner.|