Here are a few facts about Telefonica: it's a huge telecommunications company. It's based in Spain. And it's a good friend of Yahoo's, considering that Telefonica has named Yahoo the exclusive search and search advertising provider on its mobile portal in Spain.
The Telefonica-Yahoo relationship actually goes back a couple of years, since in late 2007, Telefonica made Yahoo oneSearch the main search service on 15 other mobile portals. This is just a big step forward in terms of people affected and money at stake.
Scott Ellison, IDC's Vice President of Mobile and Wireless, explained in a statement, "The expansion of Yahoo!'s mobile search partnership with Telefonica into Spain continues to demonstrate Yahoo!'s ability to provide highly personalized and localized mobile search experiences and further establishes its position as a leading mobile customer experience provider. Building a significant European market presence is essential toward executing a successful mobile strategy."
Strengthening its relationship with Telefonica might be essential to keeping Yahoo out of court, too. Telefonica's CEO has expressed an interest in getting money from Google - "search engines use our network, without paying anything for it," he said about a month ago - but the expansion of this partnership increases the odds that he'll leave Yahoo alone.
Unfortunately, the terms of this deal haven't been disclosed.