Transmitter mast staff see shares rise pounds 21: Company's financial bonanza is revealed in a leaked internal memorandum. Chris Blackhurst reports

DIRECTORS and staff at National Transcommunications Limited, the company set up to buy transmitter masts from the Government, have seen their shares rise from pounds 1 to more than pounds 22 in less than two years.

An internal memorandum leaked to the Independent reveals the bonanza, putting NTL on a par with Medway Ports, another government sell-off where management made their fortunes.

The leaked document is a circular dated July last year about the employee share scheme. Martin Stokes, the NTL company secretary, states that in January 1992 the shares were sold to staff for pounds 1 each. Every May, they are valued by the company's auditors, Ernst & Young. 'The first valuation in May 1992 assessed them at pounds 3.50 each and the latest valuation, in May 1993, assessed them at pounds 22 each.' City analysts have estimated NTL, which paid just pounds 70m for the 500 transmitters, is now worth pounds 600m. But the soaring value of the shares would indicate even that figure may be too low.

Mr Stokes said yesterday the valuation was only on paper: NTL was not yet a quoted company and there is no market in the shares. 'The valuation is done to allow me to buy back the shares of people who leave the company.' This year, he said, when Ernst & Young does the exercise again, the price 'hopefully, will be above pounds 22'. The four executive directors of NTL - John Forrest, John Okas, Ronald McKellar and Derek Chambers - are set to become millionaires when the company is floated on the stock market. They each paid pounds 28,000 for their pounds 1 shares two years ago. Today, their holdings are worth at least pounds 616,000.

Since buying the masts, they have added for pounds 6.6m the Home Office's mobile communications system for Britain's ambulance, fire, police and coastguard services, known as DTELs. Critics of the sale have complained that, as with the masts, the price paid by NTL was too low. They are now watching the expected forthcoming privatisation of the BBC's transmitter masts, where NTL will be the front-runner.

Alan Simpson, Labour MP for Nottingham South, who saw the Government relocate the headquarters of DTELs to his constituency two years ago - only for them to move away again when the operation was sold to NTL - condemned the paper profits. 'The management has done nothing to enhance the core businesses they acquired from the Government. What you've got here is a 22-fold increase in the share value of the shares they awarded themselves. The Government should be ashamed of having committed such an outrageous act of theft on the public purse,' he said.