SAN FRANCISCO • Cisco Systems, the world's largest networking gear manufacturer, is nearing a deal to buy US telecom software firm BroadSoft for close to US$2 billion (S$2.7 billion), a person familiar with the matter said on Sunday.

Bloomberg News reported earlier on Sunday that Cisco was close to a deal to acquire BroadSoft. The deal, which comes after Reuters first reported in August that BroadSoft was exploring a sale, would allow Cisco to further diversify away from its stagnating switches and routers business by giving it a stronger foothold in selling unified communications software to big telecom companies.

Cisco, like other legacy technology firms, has been focusing on high-growth areas such as security, the Internet of Things and cloud computing.

The BroadSoft deal would be Cisco's second major acquisition this year following the US$3.7 billion acquisition of privately held AppDynamics in March.

BroadSoft shares closed at US$54.90 last Friday, giving the firm a market capitalisation of US$1.67 billion. BroadSoft provides software and services that enable mobile, fixed-line and cable service providers to offer unified communications over their Internet protocol networks.

BroadSoft has historically sold its products to large telecom firms such as Verizon Communications and AT&T, which then resell the software to their business customers.

BroadSoft has recently tried to revamp its business model to sell directly to these customers, a move that risks its relationships with its telecom partners, according to a Barclays research report.

New York-based hedge fund P2 Capital Partners owned a 4.6 per cent stake in BroadSoft as of the end of June, according to Thomson Reuters data.

P2 has often behaved as an activist shareholder and has even offered to buy companies in which it has invested.

Another BroadSoft shareholder with a history of acquisitions is buyout firm KKR & Co, which is BroadSoft's 13th-largest shareholder, according to Thomson Reuters data.

REUTERS