* Combined Colombia ops valued at $3.4 bln
* Millicom, EPM each to have 50 pct stakes
* EPM to name chairman, Millicom management
* Millicom to take on $1.1 bln net debt under deal (Adds detail, background)
STOCKHOLM, July 22 Emerging markets telecoms group Millicom said on Monday it had struck a preliminary deal to merge its Colombian operations with Empresas Publicas de Medellin's (EPM) fixed line business.
The agreement in Colombia comes against a backdrop where Millicom, controlled by Swedish business family Stenbeck's investment group Kinnevik, is looking to boost growth in cable TV and broadband and meet a target of doubling annual revenues over the next five years.
Under the deal, Millicom's Colombian business was valued at $1.3 billion and that of EPM at $2.1 billion. EPM, which provides cable TV and fixed telephony services across the Medellin region, would get a 50 percent stake plus one share in the combined company.
Millicom, present in countries such as Colombia, Paraguay, Chad, Senegal and Tanzania, would own the remaining stock and take on $1.1 billion in net debt as part of the deal, but would take operational and administrative control, it said.
The deal, which is subject to negotiation of final terms and of regulatory and government approvals, would more than double the number of homes receiving entertainment and other content from Millicom's business in Colombia, it said.
"This material increase in size will generate economies of scale over time. The savings will enable Millicom to increase the profitability of its Latin American cable business while at the same time investing in attractive content," Millicom said.
The ownership structure was tailored to be in line with the approval of the Medellin city council and the deal meant the board of the combined company would be composed of four Millicom appointees and three named by EPM, Millicom said.
EPM would have the right to name the chairman while Millicom appointed the management team of the company, it added. The deal was expected to be completed by the end of the first quarter of next year, Millicom said in a statement.
Millicom, which had unveiled in February it was in talks with EPM, said it expected the deal to boost free cash flow already next year and that it had identified cost and spending synergies resulting from the deal of more than $600 million.
Growth in cable TV and fixed broadband are one of the key growth areas identified by Millicom as it looks to double annual revenues to $9 billion over the next five years. Cable broadband and TV are expected to contribute around $1.8-$2.6 billion to revenues over that time. (Reporting by Anna Ringstrom and Sven Nordenstam; editing by Niklas Pollard)