Cisco will pay $17.5 million upfront, and the remaining $27 million over four years based on the unit achieving sales milestones.

The deal is expected to close in the first half of next year, subject to the approval of DVN shareholders and regulators.

Cisco is also partnering with the rest of DVN to provide joint customers with expanded services.

Cisco called the Chinese cable market the largest in the world with 160 million subscribers and another 200 million expected to become customers in the next three to five years.

Only about one-third of Chinese cable customers are using digital cable, but the government is mandating all cable be digital by 2015, Cisco said.

"Cisco will be well positioned to engage in the largest digital transformation opportunity in the world today," said Ken Klaer, a Cisco vice president.

Cisco shares closed Monday up 19 cents at $23.