Update is required to activate

VPN or proxy connections might prevent your device from contacting the update servers.

• Get help with over-the-air iOS updates - Apple Support

• Remove and download the iOS update again

If you still can't install the latest version of iOS, try downloading the update again:

1. Go to Settings > General > [Device name] Storage.

1. Find the iOS update in the list of apps.

1. Tap the iOS update, then tap Delete Update.

1. Go to Settings > General > Software Update and download the latest iOS update.

If you don’t see the update in the list of apps or if the issue happens again, you need to update your device with iTunes.

Try updating iOS after each step.

• Try Forget the WiFi network and add again

• Try another WiFi network 

• Toggle set automatically off and then on

• Reset your network settings

• Force restart your device

• Remove any beta profiles, if applicable

• If everything fails:- Use iTunes or Finder (for macOS Catalina+) to update your device instead of over-the-air

• Get help with iOS update and restore errors - Apple Support

• If you see an error when you update or restore your iPhone, iPad

Which Update are you referring to?

1. iOS update OR
2. Carrier Settings Update

Read more...

1. iOS Update (Recommended): Released by Apple Inc basically for improvements, security and bug fixes. My 10 years of experience says, it may not be the primary cause of any failure of Cellular Data, Calls & SMSs on your iPhone, if not updated
   1. 
2. Carrier Update (Required): Released by your Cellular Service provider (Carrier Update), affects your Outgoing / Incoming calls, SMS, Data etc..
   1. 

How to Update Carrier Settings

You can manually check for and install a carrier settings update with these steps: Make sure your device is connected to a Wi-Fi or cellular network. Tap Settings > General > About. If an update is available, you'll see an option to update your carrier settings.

Update your carrier settings on your iPhone or iPad - Apple Support

How to update iOS

Go to Settings > General > Software Update > Automatic Updates, then turn off AutomaticUpdates. At any time, you can check for and install software updates. Go to Settings > General > Software Update. The screen shows the currently installed version of iOS and whether an update is available.

Update iOS software on iPhone - Apple Support