Vodafone reported a drop in second quarter revenue, blaming ongoing economic and regulatory pressures in its key market of Europe.Group service revenue, including joint ventures, dropped 3.5% year-on-year to £10.1bn in the three months to end of June.The company said conditions in Europe remained "challenging" and increased competitive intensity weighed on results.Southern Europe was the hardest hit market as service revenue fell by 14.4%, while Northern and Central Europe decreased by 3.0%. Service revenue in the UK fell by 4.5%, mainly due to price pressure. Against a background of significant revenue pressures in Europe, Vodafone said it continued to drive cost efficiencies through initiatives including further network sharing agreements, offshoring of business functions to shared service centres, centralisation of procurement costs, and ongoing reductions in support function costs.During the quarter, the group announced the acquisition of Germany's largest cable operator, Kabel Deutschland. The transaction is expected to close in the fourth quarter. Vodafone's Verizon Wireless joint venture remained strong with service revenue increasing 7.2%.In the US, Verizon Wireless added 1.0m net retail connections during the quarter, bringing the closing mobile retail connections base to 100.1m, up 6.3% year-on-year.The firm's Vodafone Red phone leasing business now has 5.2m customers since its launch in September 2012, representing around 14% of consumer contract customers.Vittorio Colao, Chief Executive, said: "We have made a good start to the year in our areas of strategic focus: growth in emerging markets has accelerated, we now have over 5.0m customers benefiting from Vodafone Red, and 4G is live in 10 markets. "In addition, the proposed acquisition of Kabel Deutschland will create an excellent platform for our unified communications strategy in our most important market. Although regulation, competitive pressures and weak economies, particularly in Southern Europe, continue to restrict revenue growth, we continue to lay strong foundations for the longer term." RD