Optimal transmission network reconfiguration is an important means to improve the economy and reliability of power grid. However, the traditional optimal transmission switching only considers the transmission line switching strategy and some approximate power flow models are adopted to make it tractable, such as linearisation or convex relaxation ones. In this article, first, a comprehensive network reconfiguration model considering both the line switching strategy and the bus splitting strategy inside substations is established. This optimal network reconfiguration incorporating AC power flow equations is an intractable mixed integer non-linear programming problem. The model is first relaxed to a mixed integer second-order cone programming to get the initial solution and an extended feasibility recovery algorithm is developed to obtain the solution satisfying the AC power flow equations. Numerical tests show that the proposed method can reduce the total generation cost and guarantee the system security while the baseline methods cannot obtain feasible solution in most cases.