McHugh will be responsible for delivering integrated communication campaigns across all media to build momentum on the recently launched "I am" brand campaign.
McHugh's first task is to appoint a new media planning and buying agency. The review process has already begun.
Orange reportedly dropped Carat and Walker Media out of contention earlier this month, which left i-Level, Mediaedge:cia, Vizeum and incumbent Initiative to battle it out.
Smith, who takes over as head of sponsorship while Hattie Magee is on maternity leave, will run the media pitch with McHugh. Macbeth is moving to another role outside the company.
McHugh joined Orange in 2002 and has been responsible for digital direct marketing and online media across the consumer mobile and broadband businesses.
He will report to Justin Billingsley, Orange UK's brand director.
Billingsley said: "Spencer has been fundamental to the success of our innovative digital marketing campaigns and online media presence.
"I look forward to him taking up his new role to deliver top class integrated brand communications, which will continue to strengthen the brand and give us differentiation in the marketplace."
McHugh's new role has been developed following the recent restructure by Tom Alexander, Orange's chief executive.