T-Mobile, a piece of Germany's Deutsche Telekom AG, and Yahoo started providing search to customers in Europe earlier this year, with each company splitting the ad search revenue. This move brings the search functionalities to the U.S and makes Yahoo the default search engine for T-Mobile customers.

Yahoo also provides search capabilities for AT&T and, when combined with T-Mobile's subscriber base, will reach over 105 million customers, Reuters reports.

Between Google and Yahoo, the two search engine companies combine for nearly 80 percent of the Web search market. But according to comScore, only about 7 percent of mobile device users actively use search on their phones. So it remains to be seen what kind of revenue boost this deal will provide to Yahoo, which recently has been doing anything possible to boost its cash flow.

Still, the announcement hasn't provided much of a bump to Yahoo's share value, which has been declining steadily this year.

Last week, Jerry Yang, former CEO of Yahoo, told the Web 2.0 Summit in San Francisco that Microsoft should purchase the company after its proposed ad deal with Google fell apart due to anti-trust concerns. After Yang's pronouncement, Yahoo's stock price rose slightly -- until the next day, when Ballmer quashed those rumors.

Earlier this week, Yang announced through a blog that he would be resigning his post as CEO of Yahoo once a successor is found. Yang also reiterated his belief that Microsoft should purchase his company.

Again, Ballmer put those rumors down, which caused Yahoo's stock to tumble another 21 percent.