What happened

Cable provider Altice USA (NYSE:ATUS) stock is hopping Tuesday morning, up 15% as of 11:25 a.m. EST after soaring more than 19% earlier in the day. And all of this happened as the result of a single press release.

Tuesday morning, Altice parent company Altice N.V. announced that it will be splitting up its U.S. and European operations, separating out Altice USA in a "spin-off" and allowing the stock to trade freely. Altice aims to complete the spin-off by the end of Q2 2018.

Finger tapping a sight that says Spin Off with light shining behind it.

Hoping to stop a steep slide in its share price, Altice USA taps the spin-off button. Image source: Getty Images.

So what

What's really curious about this announcement, and about investors' reaction to it, is that little is actually changing. After the spin-off, Altice founder Patrick Drahi will continue to control Altice Europe and Altice USA -- just as he did before the spin-off. Investors will be able to invest in Altice USA and not forced to own it vicariously by buying Altice N.V. -- but then again, they can already do that right now.

The biggest thing that is changing, is that as part of its spin-off announcement, Altice also announced that it will be paying Altice USA shareholders a special one-time dividend worth $1.5 billion ahead of the spin-off, and initiating a $2 billion share buyback plan as well. The prospect of receiving a near-immediate windfall of $3.5 billion worth of capital returns to shareholders -- an amount equal to nearly 20% of the company's current market cap -- is probably what's driving the buying frenzy on Tuesday.

Now what

That being said, money doesn't grow on trees, and with Altice USA currently unprofitable (much to the chagrin of the analysts who once recommended it), the $3.5 billion it is promising is going to have to come from somewhere other than earnings. If Altice intends to follow through on its promised capital returns, the company will probably need to add to its current $21.2 billion debt load.

If Altice hopes to earn a profit some day, adding to interest obligations seems like a funny way to go about it.

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