Pace, who make the current Foxtel Q set top box, is believed to be negotiating to also buy the rights to the Motorola name for the US market.
Google is believed to have offered to finance the deal.
According to sources close to the negotiations, Google is trying to narrow Motorola's focus toward higher-end smartphones, but the deal has been complicated due to Google's desire to retain equity and the unit's patents.
Motorola is currently engaged in patent battles with TiVo over set-top box technologies, a fact that could complicate matters for any potential buyers. Financing might also help attract buyers, sources tell Bloomberg, as the unit would face increasing competition from digital applications which accomplish much the same tasks as the hardware it manufactures.
The sale of the set-top box unit is part of Google's wider restructuring of the electronics manufacturer. Shortly after purchasing the company in May, Google announced it would cut about 4,000 staff from Motorola, roughly 20 percent of the firm's workforce.
For Pace, getting a firmer foothold and solid reach in the US would strengthen its business.
In a statement, Pace said: "Discussions with Google are currently at a preliminary stage and there is no certainty as to whether any agreement regarding any transaction will be reached."
The Guardian newspaper reported the "Home" division of MMI, which is up for sale, generated revenues of about $900m per quarter and profits of about $50m per quarter in the two years ahead of the Google acquisition, while the mobile phone division, which Google is keeping had revenues of about $2.4bn but consistently made losses of about $80m.
No deadline has been set for completing the acquisition, and Google may want to hold on to the patents owned by the set-top business in order to fend off lawsuits from other companies as it seeks to expand its own Google TV business.