Exhibit
  4.17



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|DATED 7th April
          2008                                                                     
|---------------------------------------------------------------------------------------------------
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|DIRECTOR'S
        SERVICE CONTRACT                                                                
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Group
        Legal Services
      BT Group plc
      81 Newgate Street
      London
      EC1A 7AJ
|                                                                                                   
|Tel
        : 020 7356 5238                                                                        
|                                                                                                   
|Ref:
        35301A/JWF/JJM                                                                        
|                                                                                                   

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CONTENTS

|         |                               | Page
|-------- | ----------------------------- | ----
|         |                               |     
|1.       | Interpretation                | 1   
|         |                               |     
|2.       | Period                        | 1   
|         |                               |     
|3.       | Duties                        | 2   
|         |                               |     
|4.       | Conflicts                     | 2   
|         |                               |     
|5.       | Salary                        | 2   
|         |                               |     
|6.       | Pension                       | 2   
|         |                               |     
|7.       | Holiday                       | 3   
|         |                               |     
|8        | Car                           | 3   
|         |                               |     
|9.       | Telecommunications Facilities | 3   
|         |                               |     
|10.      | Health Cover                  | 3   
|         |                               |     
|11.      | Medical Examination           | 3   
|         |                               |     
|12.      | Expenses                      | 3   
|         |                               |     
|13.      | Professional Subscriptions    | 3   
|         |                               |     
|14.      | Grievance Procedure           | 3   
|         |                               |     
|15.      | Obligation
to Provide Work    | 3   
|         |                               |     
|16.      | Termination                   | 4   
|         |                               |     
|17.      | Confidentiality               | 5   
|         |                               |     
|18.      | Copyright                     | 5   
|         |                               |     
|19.      | Restrictions                  | 5   
|         |                               |     
|20.      | Continuation                  | 5   
|         |                               |     
|21.      | Variation                     | 5   
|         |                               |     
|22.      | Notices                       | 6   
|         |                               |     
|Schedule | 7                            

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Table of Contents

DATED 7th April
  2008 PARTIES1)
      BT GROUP plc        (registered number
4190816) whose
  registered office is at 81Newgate
  Street, London
EC1A 7AJ ("BT")2)
      GAVIN
            ECHLIN PATTERSONwhose address is 81 Newgate Street, London EC1A
      7AJ (the "Director")1.
      Interpretation1.1
      In this Agreement
      the following expressions shall mean:Associated Company
      any company or venture in which BT
      or a subsidiary has a shareholding or equity participation;Board
      the board of directors of BT, or a
      committee of the board;BT Group
      BT and all its subsidiaries from time
      to timeChairman
      the Chairman of BT or his designated
      nominee;Chief Executive
      the Chief Executive of BT or his designated
      nominee;Commencement Date
      1st June 2008Salary
      £500,000 a year or such higher
      salary as may be determined by the Board;Subsidiary
      any subsidiarys which for the time
      being is a subsidiary company (as defined in Section 1159 of the Companies
      Act 2006) of BT.1.2
      A reference to something being determined,
          specified or required by BT includes a determination, specification
      or requirement from time to time1.3
      This Agreement supersedes any previous
      agreement between BT and the Director.2.
      PeriodSubject to Paragraph 16, this Agreement
          will last for an initial period of one year from and including the
          Commencement Date. It will continue until either BT has given to the
          Director previous written notice of not less than twelve months or
          the Director has given to BT previous written notice of not less than
      six months, ending in either case at any time after the initial period. 1


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|3.  | Duties                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                     
|3.1 | BT shall employ the Director as a full-time
    executive director and Chief Executive of BT Retail.                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                     
|3.2 | The Director will perform such duties,
        as would be reasonably expected of a Chief Executive of BT Retail, for
        the BT Group and Associated Companies, at such locations in the United
    Kingdom or overseas, as the Board, Chairman or Chief Executive may specify.
|    |                                                                                                                                                                                                                                                                                     
|3.3 | The Director will be bound by the BT
        share dealing rules, any other rules specified by the Board and BT's
    Articles of Association as altered from time to time.                                                                                                         
|    |                                                                                                                                                                                                                                                                                     

|4.  | Conflicts                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                              
|4.1 | The Director will promote,
        and not do any thing which is harmful or conflicts with, the interests
    and reputation of the BT Group.
|    |                                                                                                                                              
|4.2 | The Director will not without
    obtaining the written consent of the Chief Executive:                                                      
|    |                                                                                                                                              
|    | 4.2.1                                                                                                                                        
|    |                                                                                                                                              
|    | 4.2.2                                                                                                                                        
|    |                                                                                                                                              
|4.3 | The Director will pay to
        BT any fees received from any directorship of another company, unless
    BT otherwise agrees.              
|    |                                                                                                                                              

|5.  | Salary                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                               
|5.1 | The Director will be paid the Salary
        in twelve equal monthly instalments, payable on the last business day
    of each month.                                                                                                                                         
|    |                                                                                                                                                                                                                                                                               
|5.2 | The Director may be paid a bonus at
    the discretion of the Board.                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                               
|5.3 | The Director may, at the discretion
        of the Board, participate in any scheme established for BT employees
        to acquire shares in BT subject to the applicable rules of the scheme,
    but participation under such schemes will not form part of this Agreement.
|    |                                                                                                                                                                                                                                                                               

|6.  | Pension                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                               
|6.1 | BT will pay an amount of 30 per cent
        of the Salary in each year as a contribution to the Director's personal
        pension by twelve monthly instalments, payable on the last day of each
    month.
|    |                                                                                                                                                                                                               
|6.2 | The Director will be entitled to life
    insurance cover equal to four times the Salary.                                                                                                                     



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|7.   | Holiday                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                      
|     | The
          Director will be entitled to paid statutory holidays and to 27.5 days'paid
          holiday in each year which accrues rateably each month in arrears,
    to be taken at times agreed with the Chairman.                             
|     |                                                                                                                                                                                                                                                      
|8.   | Car                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                      
|     | The Director will be provided
        with a car as determined by BT and BT will meet the cost of maintenance,
    insurance, motor vehicle tax and petrol.                                                                                          
|     |                                                                                                                                                                                                                                                      
|9.   | Telecommunications
    Facilities                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                      
|     | BT will provide telecommunications
        facilities and home security at the Director's main residence and a free
    call allowance all as determined by BT.                                                                                      
|     |                                                                                                                                                                                                                                                      
|10.  | Sick Pay and Health
    Cover                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                      
|10.1 | The Director will be entitled
        to receive sick pay (inclusive of any statutory sick pay and any benefits
    payable under any permanent health insurance effected by BT) of:                                                                 
|     |                                                                                                                                                                                                                                                      
|     | •                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                      
|     | •                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                      
|     | in total in any period
        of two years, subject to production of medical certificates and to such
    other requirements as BT may reasonably request.                                                                                          
|     |                                                                                                                                                                                                                                                      
|10.2 | BT will arrange private
        health cover for the Director, the Director's spouse and children under
        the age of 18 (or 21 if in full-time education) and dental cover for
    the Director and the Director's spouse, as determined by BT.
|     |                                                                                                                                                                                                                                                      
|11.  | Medical Examination                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                      
|     | BT may, at its expense,
        require the Director to be examined by a medical practitioner of BT's
    choice.                                                                                                                                    
|     |                                                                                                                                                                                                                                                      
|12.  | Expenses                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                      
|     | BT will reimburse authorised
        expenses property incurred in the course of the Director's duties against
    receipts or other proof of expenditure.                                                                                           
|     |                                                                                                                                                                                                                                                      
|13.  | Professional Subscriptions
    and Advice                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                      
|13.1 | The Director will be reimbursed
        subscriptions to professional bodies where the Chairman considers it
    to be in the interests of BT.                                                                                                       
|     |                                                                                                                                                                                                                                                      
|13.2 | BT will pay the cost of
        personal tax and financial planning advice up to a maximum of £5,000
    (excluding VAT) a year.                                                                                                                     



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|14.  | Grievance Procedure                                                                                                                                                                                                                                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | If the Director has any
        grievance he may apply in writing to the Chairman who personally will
    either propose a solution or refer the matter to the Board.                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|15.  | Obligation to Provide
    Work                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|15.1 | BT is under no obligation
    to provide the Director with work and may:                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 15.1.1                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 15.1.2                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | in which case BT may exclude
        the Director from the premises of the BT Group but will continue to pay
        the Salary in accordance with Paragraph 5.1 and provide the benefits
    under this Agreement until this Agreement terminates.                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|15.2 | Where Paragraph 15.1.2
        applies, the Director will at BT's request promptly resign in writing
        as a director of BT (and as a member of any committee of the Board) and
        of any company of which BT is a shareholder (if necessary, in accordance
        with Paragraph 16.6) but this Agreement will not terminate on the Director
    resigning under this sub-paragraph.
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|16.  | Termination                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|16.1 | This Agreement will terminate
    immediately, without compensation:                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.1.1                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.1.2                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|16.2 | BT may terminate this Agreement
        without notice, and without compensation, if the Board believes that
    the Director:                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.2.1                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.2.2                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.2.3                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 16.2.4                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                 
|16.3 | If the Director ceases to
        be a director of BT because he is not re-elected or deemed to be re-elected
    at a general meeting, BT may either:                                                                                                                                                                                                                                          



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|     | 16.3.1                                                                                                                                                                                                                                                                                                    | terminate this Agreement subject to paying
      compensation in lieu of notice; or                                                                                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | 16.3.2                                                                                                                                                                                                                                                                                                    | require the Director to perform such
      duties for the BT Group (other than as a director of BT) as the Board, the
      Chairman or Chief Executive may specify.                                                                          
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|16.4 | Instead of giving the Director
      the twelve months' notice referred to in Paragraph 2, BT may (but shall
      not be obliged to) terminate this Agreement immediately by:                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | 16.4.1                                                                                                                                                                                                                                                                                                    | paying the Director the Salary in accordance
      with Paragraph 5.1, and                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | 16.4.2                                                                                                                                                                                                                                                                                                    | continuing or paying the value of the
      benefits referred to in Paragraph 16.4.3 as provided under this Agreement,                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | until the earlier of twelve
      months from the date of termination or the Director obtaining full-time
      employment;                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | 16.4.3                                                                                                                                                                                                                                                                                                    | the benefits are the pension benefits
      (including life cover), health cover, dental cover, the car currently provided
      on termination together with the cost of maintenance, insurance and motor
      vehicle tax (but not petrol).
|     |                                                                                                                                                                                                                                                                                                          
|16.5 | Upon termination of this
      Agreement the Director will at BT's request promptly resign in writing as
      a Director of BT (and as a member of any committee of the Board) and of
      any company of which BT is a shareholder, and will promptly return to BT
      any property of the BT Group.
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|16.6 | The Company Secretary of
      BT is irrevocably authorised to sign a letter of resignation on behalf of
      the Director if he fails to do so.                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|17.  | Confidentiality                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|17.1 | The Director will not disclose
      any confidential information relating to the BT Group or any third party
      which may have been obtained in the course of this employment.                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|17.2 | This prohibition does not
      apply to confidential information that comes into the public domain through
      no act or neglect of the Director.                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|18.  | Copyright                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|     | The copyright in any material
      arising from this employment is assigned to BT.                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|19.  | Restrictions                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                               
|19.1 | The Director will be bound
      by the provisions of the Schedule to this Agreement.                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                          
|19.2 | The
      12 month periods referred to in the Schedule will be reduced by any timeduring which the Director has been
      suspended or excluded from the premises of the BT Group under Paragraph
      15.1.                                                                                           

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|20.                                                                                 | Continuation                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|                                                                                    | Paragraphs
      16.5, 16.6 and 17 to 19 inclusive will continue in force after the termination
      of this Agreement.                                                                                                                                                                          
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|21.                                                                                 | Variation                                                                                                                                                                                                                                                                                         
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|                                                                                    | BT may vary Paragraphs 7
      to 10 inclusive, 13 and 14 but only after first consulting the Director.                                                                                                                                                                                           
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|22.                                                                                 | Notices                                                                                                                                                                                                                                                                                           
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|                                                                                    | Any notice or document may
      be served on the Director personally or by posting it to his last known
      address, or on BT addressed to the Secretary at its registered office, and
      if sent by first class post will be deemed to have been received within
      24 hours of posting.
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|                                                                                    |                                                                                                                                                                                                                                                                                                   
|Signed by the parties on
      the date written on the first page of this Agreement



|SIGNED BY              |  |                     
|---------------------- |  | --------------------
|ANDREW J. PARKER       |  | /s/ Andrew J. Parker
|                       |  |                     
|                       |  |                     
|for and on behalf of   |  |                     
|BT GROUP plc           |  |                     
|                       |  |                     
|                       |  |                     
|                       |  |                     
|SIGNED BY              |  |                     
|GAVIN ECHLIN PATTERSON |  | /s/ Gavin Patterson 
|                       |  |                     

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|S C H E D U L E
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|1.             
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|2.             
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|   | For the purposes of this Clause 2, any
        reference to “engagement or employment” means engagement or employment
        whether under a contract or otherwise and if under a contract includes
        a contract of employment, or a contract for services or any other form
        of contract and the terms “engage” and “employ” and their derivatives
        shall be construed in accordance with this definition.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | Clause 2 shall apply mutatis mutandis
        in relation to Subsidiaries as if the provisions in sub-clauses (i) -
        (iii) inclusive and the definitions were repeated with the substitution
        of the words “any of the Company’s Subsidiaries” for BT, and the Company
        contracts with the Director in this sub-clause on its own behalf and
    on behalf of each of its Subsidiaries.                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | For the avoidance of doubt it is expressly
        agreed that each of the sub-clauses (i) - (iii) in Clause 2 is intended
        to contain separate and severable restraints and if any one or more of
        such sub-clauses are for any reason unenforceable in whole or in part,
    then the other sub-clauses shall nonetheless be and remain effective.                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | The Director acknowledges that the restraints
        contained in this Schedule and each of them are necessary to protect
        the legitimate interests of the BT Group, are no wider than reasonably
        necessary for that purpose, and are reasonable as between the parties
    to this Agreement.                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | If any of the restrictions contained
        in this Schedule shall be adjudged to be void or ineffective or unenforceable
        for whatever reason but would be adjudged to be valid and effective if
        part of the wording were deleted or the periods reduced or the area reduced
        in scope, they shall apply with such modifications as may be necessary
    to make them valid and effective.              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 



|SIGNED BY                          |  |                     
|---------------------------------- |  | --------------------
|ANDREW J. PARKER                   |  | /s/ Andrew J. Parker
|                                   |  |                     
|for and on behalf of 
BT GROUP plc |  |                     
|                                   |  |                     
|                                   |  |                     
|                                   |  |                     
|                                   |  |                     
|SIGNED BY                          |  |                     
|GAVIN ECHLIN PATTERSON             |  | /s/ Gavin Patterson 

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