Hello,
I finally solved the issue for myself using the steps below if it helps you.
Disconnected phone from icloud till the end.
Reset the watch to factory default.
Reset the phone to factory default (everything erased).
Put both the phone & watch on charging.
Started the pairing procedure as usual. This time error didn't occur "your watch is not connected to the internet".
Software started downloading (8.8.1). then preparation, verification, installation & synchronization that was proposed one after another by the phone.
It took around 3-4 hours for everything to finish.
Now, watch is working fine as before.
hope it helps!
cheers