DC-AC Modular Multilevel Converter (MMC) is a promising candidate for high-power AC drive applications. The main challenge of operating the MMC in AC drive applications is its performance during low-frequency conditions, as high voltage ripple is associated with the low-frequency operation, which results in voltage stresses on the involved semiconductor devices. To keep capacitor voltages balanced and bounded in low-frequency operation, different techniques have been proposed in literature, which can be classified into software and hardware approaches. In this paper, a hybrid MMC with arm-interchange concept is proposed to ensure operating successfully during low-frequency conditions. The hybrid MMC consists of two-stages. The first stage is a front-end Integrated Gate Commutated Thyristor (IGCT)-based H-bridge converter, while the second stage is a Full-Bridge Sub-Module (FBSM)-based MMC, where FBSMs is able to generate positive, zero, and negative voltage states. Detailed illustration and design of the hybrid MMC are introduced. Simulation results of the proposed converter are presented to show the effectiveness during low-frequency and normal frequency conditions in AC drive applications. Finally, a scaled-down prototype is employed for experimental validation.