The Union Budget 2026 has allocated ₹73,990 crore to the telecom sector, with funding directed towards rural broadband under BharatNet and network modernisation of Bharat Sanchar Nigam Limited (BSNL).
Alongside direct public spending, the Budget introduces an Infrastructure Risk Guarantee Fund to provide partial credit guarantees to lenders financing digital infrastructure projects, including fibre networks and telecom towers. The mechanism is intended to support debt funding for projects that are commercially viable but face elevated construction and execution risk.
Risk guarantees for fibre and tower projects
Fibre-to-the-home and telecom tower projects typically have construction periods of 18 to 24 months, during which no operating revenue is generated while capital and financing costs continue to accrue. This has historically constrained bank lending and institutional participation.
Under the new framework, the Infrastructure Risk Guarantee Fund will offer partial credit guarantees, typically covering a portion of potential losses during the construction phase. The guarantee is designed to lower lender risk exposure and enable debt financing for projects that would otherwise face funding constraints. The instrument is applicable to fibre network developers and tower companies undertaking new build-outs.
Focus on tier-II and tier-III 5G expansion
The ₹73,990 crore allocation supports continued 5G expansion in non-metro markets, including tier-II and tier-III cities. Private telecom operators such as Reliance Jio, Bharti Airtel and Vodafone Idea have so far prioritised large urban centres due to higher revenue density.
5G deployments require significantly higher site density compared with 4G networks because of shorter signal propagation ranges. As a result, 5G roll-outs in smaller cities require substantially higher investment in towers and fibre backhaul.
The risk guarantee mechanism is intended to enable tower companies and fibre infrastructure providers to raise debt for such projects, even where individual operator revenue profiles are not sufficient to independently support large capital outlays.
BSNL modernisation as anchor demand
The Budget also provides support for BSNL’s network modernisation programme, including migration from legacy copper infrastructure to fibre and the deployment of 4G and 5G services in rural and semi-urban areas.
BSNL’s procurement and rollout programmes create assured demand for telecom equipment, fibre and network services, particularly in regions where private operators have limited commercial incentives to invest.
Infrastructure sharing and neutral-host networks
The Budget signals continued policy support for active and passive infrastructure sharing models. Under this approach, towers and fibre networks are developed as neutral-host infrastructure and shared by multiple service providers.
The Infrastructure Risk Guarantee Fund is applicable to such shared-infrastructure projects, where utilisation is driven by multiple tenant operators. These models are being positioned to support faster expansion of telecom and broadband infrastructure while reducing duplication of network assets.
Together, direct public funding and the new risk-guarantee framework form the principal financing instruments for telecom infrastructure expansion under Budget 2026.
