Abstract: Mountainous distribution networks face challenges including complex terrain, scattered lines, and inefficient traditional manual inspections, which complicate fault localization. While low-voltage transparency initiatives enhance monitoring capabilities, their full-coverage implementation requires substantial investment. To balance cost-effectiveness and reliability, this study develops a multi-objective optimization model that considers fault frequency, load importance, and communication conditions. An improved particle swarm optimization algorithm is employed to determine differentiated deployment strategies. Using Lishui's mountainous distribution network as a case study, the results demonstrate that the optimized solution achieves full coverage in high-frequency fault-prone areas while significantly reducing construction and operational costs, shortening fault response times, and improving power supply reliability. This provides an economically viable technical pathway and scientific basis for intelligent distribution network development in mountainous regions.