I finally managed to remove permanent "Failed to update modem" message.
Message is caused by system application HuaweiInit.apk which I found safe to remove after message appears, as after removal there is no annoying message nor bugs.
Also, now all telephony apps could be removed since S7-931w doesn't have any way to use it.
Now we can have S7-931u firmware on our S7-931w. For me, it seems that u firmware is more responsive.
Using S7-931u firmware also brings back USB Mass storage mode which was removed in latest S7-931w firmware.
However, it's still a lot of thing to done, there is annoying empty(gray) GSM signal icon next to the battery, and we should do something more serious with it like optimizing it.
Later I'll post brief tutorial, and maybe release modded S7-931u rom for S7-931w.