An update is required to activate

Connect to a Mac or Windows system and try to activate there.

It’s basically the following sequence; to connect to a Mac or Windows computer, and use that update the iPhone.

If you can't activate your iPhone - Apple Support

You might then see the following error, too:

If you see "Software update is required to connect to your iOS device" on your iPhone, iPad, or iPod touch - Apple Support

It's a cellular update. Ask your carrier for help.