eew , you're shelling out for cut

Here is a oneliner

perl -F: -lane " print qq/-------/ if 1==$.; print join q/|/, @F, qq//
+; print q/--/ x @F, qq//; "   < infile > outfile
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more verbosely written as

 BEGIN { $/ = "\n"; $\ = "\n"; }
LINE: while (defined($_ = <ARGV>)) {
    chomp $_;
    our(@F) = split(/:/, $_, 0);
    print '-------' if 1 == $.;
    print join('|', @F, '');
    print '--' x @F, '';
}
[download]