set myFile to choose file with prompt "Select an XML file"
This will work with multiple lines:

set myText to {"one:two:three:four:five:"}
set the end of myText to return & "abc:def:"
set the end of myText to return & "ghi:jkl:"
set the end of myText to return & "mno:pqr:"
set the end of myText to return & "stw:xyz:" & return
set AppleScript's text item delimiters to {""}
set myText to myText as text

-- myText is 6 lines of text

set xmlString to (read myFile)

set xmlString to (read myFile)
set AppleScript's text item delimiters to {return}

set myText to every text item of myText
set AppleScript's text item delimiters to {xmlString & return}
set newText to myText as string