How to prevent Google Hangouts from showing nagging "Upgrade Required" screen? I am using Google Hangouts old version v10 for SMS because its seems no other SMS app does support merging SMS threads by contact (I have tested all top SMS apps). 

I have disabled playmaket auto-updates. I wonder is there a way to get rid of nagging "Upgrade Required" screen? Hangouts show it on the every launch. I have tried block this app from internet access - no luck. 

It does require internet for initial login. After that even with LightingWall(xposed module) or Flight profile 'Upgrade now' persist forever.
May be some settings can be altered directly? Or apk may be hacked somehow?

I still can launch app indirect although; it is registered as SMS app so I can launch Hangouts SMS threads from say drupe.

UPDATE: Upgrading Hangouts to latest version and using XHangounts does not return proper merging of SMS.
No you cannot, thats unfortunate.
In order to keep the user up to date with the newest features in the application, the Android OS as well as each of the APP ask to update.

The update includes many fixes, security updates and much more.