unable to activate new iphone an update is required

Try first to optimize the range of the mobile network, see this Apple article:

If you see No Service or Searching on your iPhone or iPad

If you see No Service or Searching on your iPhone or iPad - Apple Support

👉 If you still don't have a 'service' after that, see -> iPhone 7 Repair Program for "No Service" Issues

iPhone 7 Repair Program for "No Service" Issues - Apple Support

See also these Apple articles below:

Manually update your carrier settings on your iPhone or iPad

Manually update your carrier settings on your iPhone or iPad - Apple Support

Update your network provider settings manually on your iPhone or iPad

Update your network provider settings manually on your iPhone or iPad – Apple Support (UK)